Trade Secret Protections In The US At Federal Level For Those Observing Appropriate Measures

Author:Mr Gertjan Kuipers, Tobias Cohen Jehoram and Tjibbe Douma
Profession:De Brauw Blackstone Westbroek N.V.

Every company has trade secrets, whether these are technical trade secrets (such as a certain process) or commercial trade secrets (such as business strategies and client lists). The US House of Representatives recently approved the Trade Secrets Protection Act, which creates a federal civil remedy for the misappropriation of trade secrets. The act will now have to be voted on by the US Senate, but is expected to pass. Once implemented, the protection of trade secrets will be more consistent between states and in some respects also broader. That is because currently the Uniform Trade Secrets Act of 1979 allows for protection at state level. The act will also provide a more streamlined form of protection, as intellectual property rights are already regulated at federal level. The act, together with recent developments in Europe regarding a Trade Secret Directive, reflects the importance of protecting trade secrets. Companies must protect their trade secrets by developing a trade secret protection strategy, and include it in their intellectual property strategy. Only companies that have taken appropriate measures to protect their trade secrets will be able to request protection of their trade secrets under the trade secret provisions.

Current situation in the US

The Uniform Trade Secrets Act of 1979 (1979 Act), which now provides the basis for the protection of trade secrets at state level, aimed to codify and harmonise standards regarding the misappropriation of trade secrets. Trade secret protection is available for information that:

is "secret"; that is, not publicly accessible for people in the same business has commercial value because it is secret, providing an advantage over competitors is subject to reasonable steps to keep it secret, through actions, policies and agreements. If these requirements are fulfilled, the proprietor can take action to prevent the information from being disclosed, acquired or used by third parties without its consent and in a manner contrary to the honest commercial practice.

Since its implementation, 47 of the 50 states adopted the 1979 Act. In the three states where it was not adopted (including New York), trade secrets protection is rooted in tort and these states created their own definition of what constitutes a trade secret. They also enacted their own set of remedies. Compared to the protection of intellectual property rights at federal level, in particular patent rights, state level trade secret...

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