Technically stated, trade secrets consist of all types of business, technical, economic, or engineering information, including patterns, compilations, formulas, prototypes, techniques, programs, and codes, whether tangible or intangible, if the owner of such information has taken reasonable measures to keep it secret, and the information provides independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by, the public.
Simply stated – any confidential business information that provides a business a competitive edge may be considered a trade secret.
Trade secret law is what protects some of America’s most iconic inventions, including Coca-Cola and Colonel Sanders’ famous original recipe. The improper acquisition and use of trade secrets is a particularly economically damaging issue. It is estimated that the annual losses to the American economy attributable to trade secret theft are over $300 billion.
In response to this national concern, the Defend Trade Secrets Act (“DTSA”) was signed into law on May 11, 2016. The DTSA creates a uniform trade secret law that is intended to be interpreted by federal judges who are competent in dealing with intellectual property matters. Prior to the DTSA, federal protection of trade secrets was limited to the criminal aspects of trade secret theft. Under the DTSA, trade secret owners can now sue in federal court for a variety of remedies, including injunctions to prevent the further use of trade secrets, damages for twice the amount of damages actually incurred by the trade secret owner and the recovery of attorneys’ fees.
The DTSA also provides an innovative solution to previous problems with the slow speed of and preservation of evidence in trade secret lawsuits by providing that a federal judge may issue a fast-track order that allows a trade secret owner to seize all property necessary to stop the misappropriation of trade secrets. This solution is intended to help stop the destruction of evidence in the litigation of trade secret claims and prevent the dissemination of trade secret information once misappropriation has occurred.
Even though the DTSA represents an improvement in the protections afforded trade secret owners, taking precautionary measures to prevent the improper misappropriation and use of trade secrets is still the most effective and cost-efficient way to protect trade secrets. Obtaining patents for trade secrets that are patentable, limiting the number of people who know the secret and using confidentiality agreements with employees, business partners and other third parties are just a few of the ways that business owners can protect their trade secrets.
If you are concerned about the potential misappropriation of your business’s trade secrets or if you have questions about protecting your business’s trade secrets, trademarks or other intellectual property rights, be sure to visit with a competent business attorney experienced in intellectual property matters.