The Secrecy Requirement Quiz

PDF page 183: The second element necessary to gain trade secret protection is evidence that the trade secret’s owner made a reasonable effort to maintain secrecy. This flexible standard set out by the UTSA is often a point of contention, which results in litigation. To determine whether a piece of information rises to the level of a trade secret, courts often engage in a highly factual inquiry into the security measures taken by the owner to protect a trade secret. For as the Supreme Court has noted, if an owner has not taken steps to protect the trade secret,

PDF page 183: The second element necessary to gain trade secret protection is evidence that the trade secret’s owner made a reasonable effort to maintain secrecy. This flexible standard set out by the UTSA is often a point of contention, which results in litigation. To determine whether a piece of information rises to the level of a trade secret, courts often engage in a highly factual inquiry into the security measures taken by the owner to protect a trade secret. For as the Supreme Court has noted, if an owner has not taken steps to protect the trade secret,

PDF page 183: The second element necessary to gain trade secret protection is evidence that the trade secret’s owner made a reasonable effort to maintain secrecy. This flexible standard set out by the UTSA is often a point of contention, which results in litigation. To determine whether a piece of information rises to the level of a trade secret, courts often engage in a highly factual inquiry into the security measures taken by the owner to protect a trade secret. For as the Supreme Court has noted, if an owner has not taken steps to protect the trade secret,

PDF page 183: their proprietary interests may be diminished.

PDF page 183: Because the UTSA may be varied by any state, the level of secrecy required varies from state to state. For

PDF page 184: example, a version of the UTSA adopted by some states contains a provision that reduces the burden of secrecy placed on the owner of a trade secret. Specifically, this version of the UTSA provides that the existence of a trade secret is not negated merely because an employee or other person has acquired the trade secret without express or specific notice that it is a trade secret if, under all the circumstances, the employee or other person knows or has reason to know that the owner intends or expects the secrecy of the type of information comprising the trade secret to be maintained. Although this provision tips the scales in favor of trade secret protection, it should not be viewed as removing the affirmative obligation the UTSA places on one seeking protection of trade secrets. In both states that have and have not modified the UTSA in this manner, the measures taken to secure the information are key to finding whether the information will be protected as a trade secret. Because trade secret protection is only given to information that is subject to reasonable efforts to maintain secrecy, every person or company that desires to protect its trade secrets under the UTSA should adopt and implement a trade secret protection plan. The specific elements of such a plan will vary depending on the nature of the intellectual property to be protected, as well as the circumstances surrounding its development and use. However, in taking reasonable efforts to protect the secrecy of the information, many different factors are considered. Because no rigid formula exists to determine if reasonable efforts to maintain secrecy are in place, courts look to many of the best practices, discussed below, to determine whether an owner of information made reasonable efforts to protect its secrecy.

PDF page 184: are merely written, but not followed, it may be difficult to prove reasonable efforts to maintain secrecy.

PDF page 184: A trade secret protection plan should include a program for ensuring that employees are made aware of the trade secret status of information and that the employees are periodically reminded of their confidentiality obligations. Discussions between the employer and the employee may be appropriate. Writing an annual conflict of interest letter to remind management-level employees of their responsibilities in keeping information confidential may also suffice. An essential part of this program is making certain that employees are aware of and familiar with the written trade secret protection plan discussed above.

PDF page 184: Employees should also be required to sign confidentiality agreements acknowledging that they have access to trade secret information, that they will not disclose or misappropriate that information, and that they will report all disclosures. Finally, “exit interviews” should be conducted for employees leaving the company. This interview provides an opportunity to remind employees of their written obligation not to disclose or misuse any trade secret information, and to extend an open door to discuss any issues or concerns that may arise in

PDF page 184: Employees should also be required to sign confidentiality agreements acknowledging that they have access to trade secret information, that they will not disclose or misappropriate that information, and that they will report all disclosures. Finally, “exit interviews” should be conducted for employees leaving the company. This interview provides an opportunity to remind employees of their written obligation not to disclose or misuse any trade secret information, and to extend an open door to discuss any issues or concerns that may arise in

PDF page 185: In addition to educating employees, reasonable efforts to protect information often include physically restricting access to trade secrets. Trade secret information should be treated differently from nonproprietary information and should, if possible, be physically segregated so that it is not readily accessible. For example, it is not uncommon to restrict visitor access to sales and administrative headquarters. In addition, access to the intellectual property should be restricted to those with a need to know or access the information. Depending on the nature of the intellectual property to be protected, reasonably restricting access to trade secrets may be as simple as segregating the information in separate file drawers, or may require measures as extreme as

PDF page 185: If possible under the circumstances, physical security measures should be instituted, including the use of locks on doors, gates, and cabinets containing trade secrets. These physical security steps should be obvious to both

PDF page 185: Given the ease with which documents can be reproduced, trade secrets that are reduced to writing should be treated with special care. Documents containing trade secrets should be clearly labeled with shorthand instructions that are consistent with the written trade secret protection plan. For example, documents may be

PDF page 185: marked “secret” or “confidential.” Access to these documents should be monitored and all persons allowed access to the documents should be informed of the meaning of the trade secret designation on the document and the relevant provisions of the written trade secret protection plan. This attention to detail should also be