Trade secrets are governed by state law and by the Defend Trade Secrets Act of 2016 (DTSA), which provides a federal cause of action.
New York Law
New York trade secrets are governed by the common law. To prevail on a claim of misappropriation of trade secrets a claimant must show that:
(1) it possessed a trade secret, and
(2) it was obtained in breach of an agreement, confidential relationship, or duty, or as a result of discovery through improper means.
New York defines “trade secret” as a “formula, process, device, or compilation which one uses in his business and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” Remedies for trade secret misappropriation include injunctive relief and damages for the economic harm suffered. Punitive damages may be available in exceptional cases.
New Jersey Law
New Jersey’s Trade Secret Act defines “trade secret” as “information, held by one or more people, without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process, that:
(1) 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
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
Remedies under the Act include injunctive relief, payment of reasonable royalties, damages based on actual loss and unjust enrichment, punitive damages, and reasonable attorneys’ fees and costs.
The DTSA broadly defines “trade secret” as “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if
(A) the owner thereof has taken reasonable measures to keep such information secret; and
(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.”
There are two ways an entity may be found liable for trade secrets misappropriation under the DTSA:
(1) 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
(2) disclosure or use of a trade secret of another without express or implied consent.
Remedies under the DTSA include injunctive relief, payment of a reasonable royalty, damages (including exemplary damages double the damages amount already awarded), attorneys’ fees, and, in exceptional circumstances, civil seizure.