A trade secret:
- is information that has either actual or potential independent economic value by virtue of not being generally known,
- has value to others who cannot legitimately obtain the information, and
- is subject to reasonable efforts to maintain its secrecy.
All three elements are required; if any element ceases to exist, then the trade secret will also cease to exist. Otherwise there is no limit on the amount of time a trade secret is protected.
The Economic Espionage Act of 1996 criminalizes trade theft under two sets of circumstances. Economic espionage refers to the theft of a trade secret “intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent.” The second offense — the theft of trade secrets — addresses theft “that is related to a product or service used in or intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret.” These crimes are prosecuted by the Department of Justice and are punishable by imprisonment and/or fines.
The Defend Trade Secrets Act of 2016 (DTSA) amended the Economic Espionage Act to establish a private civil cause of action for the misappropriation of a trade secret. This cause of action provides trade secret owners with a uniform, reliable, and predictable way to protect their valuable trade secrets anywhere in the country. The DTSA does not preempt existing state trade secret law, thus giving trade secret owners the option of state or federal venues.
U.S. courts can protect a trade secret by (a) ordering that the misappropriation stop, (b) that the secret be protected from public exposure, and (c) in extraordinary circumstances, ordering the seizure of the misappropriated trade secret. At the conclusion of a trade secret case, courts can award damages, court costs, reasonable attorneys' fees and a permanent injunction, if warranted.
Trade secret protection is a complement to patent protection. Patents require the inventor to provide a detailed and enabling disclosure about the invention in exchange for the right to exclude others from practicing the invention for a limited period of time. Patents expire, and when that happens the information contained within is no longer protected. However, unlike trade secrets, patents may protect against independent discovery. Patent protection also eliminates the need to maintain secrecy.
While the definition of protectable “information” is very broad under trade secret law, there are more limitations on what can be protected by a patent. If a given invention is eligible for either patent or trade secret protection, then the decision on how to protect that invention depends on business considerations and weighing the relative benefits of each type of intellectual property protection.
Trade Secrets Video
A three-minute video produced by the USPTO provides a brief, yet informative introduction on what trade secrets are, why you should protect them, how they can impact a business’s bottom line, and their importance as intellectual property.
2017 Trade Secrets Symposium
On May 8, 2017, at the one-year anniversary of the enactment of the Defend Trade Secrets Act of 2016, the USPTO convened a one-day symposium on trade secrets: “Developments in Trade Secret Protection.” Videos of all four panel sessions are available for viewing online.
2015 Trade Secrets Symposium
On January 8, 2015, the USPTO organized a one-day symposium on issues relevant to the protection of trade secrets. Videos of the symposium are available for viewing online.
Defend Trade Secrets Act of 2016
Public law 114-153. Dated May 11, 2016. Read the full text of the law here.
The Defend Trade Secrets Act at Five: The Inevitable Disclosure Doctrine (October 2021)
On the fifth anniversary of the enactment of the Defend Trade Secrets Act of 2016, this paper looks at the relationship between the act and the “inevitable disclosure” doctrine. The doctrine allows a court to enjoin a former employee from working for a competitor because the nature of the new job and the knowledge of the employee makes it inevitable that the trade secrets of the former employer will be disclosed.