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Uniform Trade Secrets Act

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Overview Edit

The Uniform Trade Secrets Act (UTSA) is a model law drafted by the National Conference of Commissioners on Uniform State Laws to better define rights and remedies of common law trade secret. It has been adopted by 46 states, the District of Columbia and the U.S. Virgin Islands. Massachusetts, New Jersey, New York and Texas have not adopted the Act. Some of these states continue to apply the common law to trade secrets, and some have adopted separate state statutes.

Definition of trade secret Edit

The act defines a trade secret as

information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Misappropriation Edit

Misappropriation is the wrongful acquisition, disclosure or use of a trade secret, which is defined as:

a) acquiring the secret through improper means or from another person knowing that they acquired the secret by improper means or b) disclosing or using the secret without consent when the circumstances create a duty not to disclose or use it.

Under the Act these circumstances exist when the trade secret has been acquired:

  • improperly; or
  • under an obligation not to disclose or use it; or
  • from someone else who had an obligation not to disclose it; or
  • by accident or mistake (for example, through a misdirected email or facsimile transmission), if before using or disclosing the trade secret the person acquiring it learns that it is a trade secret. This is one of the reasons that many firms and individuals who deal regularly with trade secret information routinely include a notice in their emails and fax cover sheets advising of the confidential nature of the contents.

Pleading Edit

A cause of action for monetary relief under UTSA may be said to consist of the following elements: (1) possession by the plaintiff of a trade secret; (2) the defendant’s misappropriation of the trade secret, meaning its wrongful acquisition, disclosure, or use; and (3) resulting or threatened injury to the plaintiff.

The first of these elements is typically the most important, in the sense that until the content and nature of the claimed secret is ascertained, it will likely be impossible to intelligibly analyze the remaining issues.

Under California law, a trade secret plaintiff must, prior to commencing discovery, “identify the trade secret with reasonable particularity.”[1]

Remedies Edit

The UTSA imposes civil rather than criminal liability for misappropriation of trade secrets and creates a private cause of action for the victim. Remedies for misappropriation of trade secrets under the Act are injunctions, damages, including "exemplary" (punitive) damages, and, in cases of bad faith or willful and malicious misappropriation, reasonable attorney's fees.

Defenses Edit

The UTSA does not codify the defenses traditionally recognized in the common law of trade secrets, such as disclosure by the owner, reverse engineering, independent development, etc.

Preservation of secrecy Edit

The Act also permits courts to grant protective orders to ensure the secrecy of a trade secret during discovery and to prevent disclosure by witnesses. In addition, the Act authorized in camera hearings to take testimony.

References Edit

  1. Cal. Code Civ. Proc. §2019.210; see Mark Lemley, "The Surprising Virtues of Treating Trade Secrets as IP Rights" 61 Stan.L.Rev. 311, 344 (2008) (plaintiff should be required to “clearly define[] what it claims to own, rather than (as happens all too often in practice) falling back on vague hand waving”).)

See also Edit

External link Edit

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