Clinton, Clinton & Chern, lawyers in Long Beach, CA, California

Uniform Trade Secret Act Overview

Employers have always had some form of legal protection against former employees misappropriating their trade secrets. Because state common law, however, had evolved differently from state to state, it was uncertain what was protectable and what was not. Former employees could move to multiple states, and an employer's rights would vary from state to state. Once a trade secret was disclosed in one state, it was no longer a protectable trade secret in any state.

In 1979, the National Conference of Commissioners on Uniform State Laws created the Uniform Trade Secrets Act, which has since been adopted by 45 states, the District of Columbia, and the United States Virgin Islands. Under the Act, trade secrets have a consistent definition and employers have a consistent set of remedies.

What is a "trade secret" under the Act?

Employers' protections hinge upon the definition of a trade secret. The Act defines "trade secret" as:

"Information" that:

Is not "generally known" or "readily ascertainable" by others who can obtain economic value from use of the information,
Has "independent economic value" from "not being generally known," and
Is the subject of reasonable efforts to maintain its secrecy.

Under the Act, "information" can include:

Formulas,
Patterns,
Compilations,
Program devices,
Methods,
Techniques, or
Processes.

Under this definition of a trade secret, employers may not protect information that has already been disclosed to the public or information that is "vague" or "nonspecific." They may also not protect information that has no economic value. In order to pursue a remedy under the Act, an employer must have taken steps to protect the information by labeling it as "confidential" or by instructing its employees that the information was not to be disclosed. Some specific examples of protectable trade secrets include:

Customer lists,
"Secret" Recipes,
Training Methods,
Production Processes, and
Product Designs.

Misappropriation under the Act

Under the Act, it is unlawful to "misappropriate" a trade secret. Misappropriation is generally defined as:

Acquiring the trade secret by improper means, or
Disclosing the trade secret without the express consent of the owner.

Remedies under the Act

If an employer can prove that a former employee is misappropriating or is threatening to misappropriate a trade secret, it may ask a court to "enjoin" or stop the former employee from disclosing the secret. The employer may also seek monetary damages for the harm caused by any disclosure that has already occurred. Courts may award punitive damages where the misappropriation was willful and malicious. In such a case, employers may also recover attorney's fees.