Defending a case alleging misappropriation of trade secret requires a close examination of examine whether there is real economic value to keeping the information secret.The touchstone of a trade secret is that it provides the owner of the information with a competitive advantage in their market. Courts look at the cost of development, the difficulty in duplicating and measurable benefits to ascertain whether a bona fide trade secret exists.
The first issue in the defense of any claim for misappropriation of a trade secret is to figure out if there is really a trade secret at issue, whether the claim is brought under the federal Defend Trade Secrets Act (DTSA), a state Uniform Trade Secrets Act (UTSA) (from which the DTSA was derived) or state common law.
The UTSA provides a simple definition of what is trade secret and what constitutes misappropriation. This post looks at the critical threshold issue, namely whether that trade secret actually competitive information that should be protected from disclosure?
Under UTSA, a trade secret is information that:
-- 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
-- .Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
The DTSA, a federal law that creates a federal cause of action, uses a substantially identical definition. There are three lines of defense to consider in a case under either law: that the information is not a trade secret because it is not competitive, the information is not secret, or because the information was not misappropriated.
The focus here is on the first element. Is the information proprietary? In other words, does it have real commercial value to the owner, and does the owner depends on secrecy to protect that information.
