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TRADE SECRETS

Disclaimer:  The following material is informational and general in nature and not intended to be offered as legal advice.  To obtain legal advice an attorney should be consulted with the specific facts of your case.

1.0 Applicable Law
1.1 Trade Secret is a matter state law (unlike patents, trademarks, copyrights which are mostly creatures of federal law).
1.2 Uniform Trade Secrets Act.  Most states have adopted the Uniform Trade Secrets Act (UTSA), providing a uniform body of law in jurisdiction adopting the UTSA.
1.3 Trade Secrets, if properly maintained, can be potentially infinite in duration and thus very valuable.

2.0  “Trade secret” means information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from no 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.
2.1 A trade secret can be of a technological nature and thus potentially patentable but need not be.
2.1.1 Trade secrets can include, but are not limited to, technological information, business methods, manufacturing processes, customer lists.
2.1.2 Trade secrets must be in “continuous use” in the claimant’s business (as an example, one time information such as the terms for a secret bid in a contract, the date of an announcement of the release of a new product would not qualify as continuous due to the information not being used continuously or repeatedly in the business).

3.0 Misappropriation
3.1 For a trade secret to be illegally misappropriated, the trade secret must have been:
3.1.2 Acquired by a person who knows or has reason to know that the trade secret was acquired by improper means; or
3.1.3 Disclosed without express or implied consent by a person who;
3.1.3.1 Used improper means to acquire knowledge of the trade secret; or
3.1.3.2 At the time of disclosure or use knew or had reason to know that his knowledge of the trade secret was (I) derived from or through a person who has utilized improper means to acquire it;
3.1.3.3 Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
3.1.3.4 Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
3.1.3.5 Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
3.2 Factors considered by courts in determining whether a trade secret exists:
3.2.1 How widely is the information known outside the claimant’s business;
3.2.2 Who within the claimant’s organization is aware of the information;
3.2.3 What measures has the claimant taken to ensure that the information remains secret;
3.2.3.1 Historically, extraordinary measures must be taken to maintain a trade secret.  This means limited personnel having access to the information, areas within the organization being off limits to those not having the need to know, departing employee exit interviews where the trade secrets are identified and the employee warned.
3.2.4 How valuable is the information to the claimant and its competitors;
3.2.5 How much effort or money has the claimant spent to develop or acquire the information;
3.2.6 How difficult would it be for others to properly acquire and duplicate the information.
3.2.6.1 If the information can be reverse engineered without an improper misappropriation, the trade secret is lost.
© Richard C. Emery
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Richard C. Emery 
Intellectual Property Attorney
3564 Rollingview Dr Suite G
Whitebear Lake, MN 55110
(651) 704-0080
Fax (651) 704-0079
rcemery@emeryiplaw.com