Introduction to Trade Secret Law

Origin of Trade Secret Protection

● The Roman Empire and misappropriation or theft of
trade secrets

● The Roman courts recognized a cause of action for

“actio servi corrupti,” which means an action for
corrupting a slave

● Slave owners relied on the cause to protect them from

theft of confidential business information by third
parties who would intimidate, bribe, or “corrupt” their
slaves into disclosing the information
 From the Roman Empire to
Western Capitalism
● Presently, what entities require trade secret
protection?

● Who is most likely to disclose a trade secret?

● Who is most likely to benefit from disclosure?

 Source of Law for Trade
Secret Protection
● Common law tort of improper use or disclosure of trade secrets

● Restatement of Torts, §§ 757-758, which were adopted by most

courts in most states is now supplanted by the Restatement (Third)
of Unfair Competition, § 39

● In 1979, a model act was promulgated and is called the Uniform

Trade Secrets Act, which was amended in 1985 (civil remedies)

● Through implementation of GATT-TRIPs, Congress provided

national protection for owners of trade secrets with the 1996
Economic Espionage Act, 15 U.S.C.A. §§ 1831-1839 (federal
criminal remedies)
 Two Theories of Trade
Secret Protection
● Utilitarian Theory ● Deterrence Theory
– Property Rights – Commercial Morality or
duty-based obligation
– Protecting against theft,
improper use or disclosure – Discourage wrongful or
of proprietary illicit commercial
information encourages behavior that undermines
investment in such trust
information
● How do each of these
theories view the nature
of intellectual property?
 Drafting and Evaluating a
Trade Secret Claim
● What is a trade secret?

● Is there a threshold requirement of creativity or

innovation before protection becomes available?

● What elements are required to state a claim for

misappropriation, theft, or improper use?

● What are the tests for each of these elements?

 Answers
● A trade secret means information, including a formula,
patent, compilation, program, device, method, technique,
or process, 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 circumstances to
maintain its secrecy

● No, a threshold is not required; the only requirement is

secrecy of information that derives independent economic
value from remaining secret
 Answers
● Generally, there are three elements (and their tests) to a trade secret
claim:
– the subject matter involved must qualify for trade secret protection
● it must be the type of knowledge or information that trade secret law
was meant to protect; and
● it must not be generally known to all
– a showing of misappropriation
● through deception or theft
● through breach of an explicit obligation
● through breach of an implied duty
– a showing of reasonable precautions to prevent disclosure
● diligence
● constructive knowledge standard