Misappropriation of Trade Secrets in United States

The Restatement of Torts at §757 describes misappropriation as follows:

“One who discloses or uses another’s trade secret, without a privilege to do so, is liable to the other if

(a) he discovered the secret by improper means, or
(b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him, or
(c) he learned the secret from a third person with notice of the facts that it was a secret and that the third person discovered it by improper means or that the third person’s disclosure of it was otherwise a breach of his duty to the other, or
(d) he learned the secret with notice of the facts that it was a secret and that disclosure was made to him by mistake.”

The Restatement §758 considers use of another’s trade secret originally acquired without notice of its wrongful or mistaken disclosure, as follows:

“One who learns another’s trade secret from a third person without notice that it is secret and that the third person’s disclosure is a breach of his duty to the other, or who learns the secret through a mistake without notice of the secrecy and the mistake,

(a) is not liable to the other for a disclosure or use of the secret prior to receipt of such notice, and

(b) is liable to the other for a disclosure or use of the secret after the receipt of such notice, unless prior thereto he has in good faith paid value for the secret or has so changed his position that to subject him to liability would be inequitable.” (id. at §758)

The Uniform Trade Secrets Act (UTSA) §1(4) provides the following definition of “misappropriation”:

(i) “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(ii) disclosure or use of a trade secret of another without express or implied consent by a person who
(A) used improper means to acquire knowledge of the trade secret; or
(B) 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;
(II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or

(III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or

(C) 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.” (UTSA §1(4))

Once a trade secret misappropriation is found, the UTSA provides remedies for the aggrieved party. Traditional remedies, such as money damages and injunctions, are provided under the Uniform Trade Secrets Act. One change from the common law under the Uniform Trade Secrets Act was that under the common law, injunctions for prohibiting the defendant from using or disclosing the trade secret were granted for a period of time which was believed to be sufficient to reverse engineer the trade secret.

Establishing Liability for Misappropriation of Trade Secrets

This section discusses generally the subject of Establishing Liability for Misappropriation of Trade Secrets, how to determine the facts essential to Establishing Liability for Misappropriation of Trade Secrets, and, to some extent, how to prove it in litigation and defense. Related topics are also addressed.

Misappropriation of Trade Secrets Under Uniform Trade Secrets Act

This section discusses generally the subject of Misappropriation of Trade Secrets Under Uniform Trade Secrets Act, how to determine the facts essential to Misappropriation of Trade Secrets Under Uniform Trade Secrets Act, and, to some extent, how to prove it in litigation and defense. Related topics are also addressed.

Resources

See Also

Further Reading

Gurney BJ, Ferrentino JT, White AB 2013. Benefits of early discovery in defending trade secret misappropriation claims. NY Law J 249