Trade Secret Information

Trade Secrets Information and Infringement

A trade secret is defined as any “formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” Bear, Stearns Funding, Inc., 361 F.Supp.2d at 304 (citing, inter alia, Ashland Mgmt. v. Janien, 82 N.Y.2d 395, 407, 624 N.E.2d 1007, 1012-13, 604 N.Y.S.2d 912, 917-18 (1993)).  Some courts, including New York, rely on the definition of trade secrets provided by Restatement of Torts § 757, comment b, which defines a trade secret as “any formula pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” Ashland Management, Inc. v. Janien, 82 N.Y.2d 395, 407, 604 N.Y.S.2d 912, 624 N.E.2d 1007 (1993). According to Restatement of Torts, § 757, comment c, quoted in Omnitech Int’l. Inc. v. Clorox Co., 11 F.3d 1316, 1325 (5th Cir.1994), a party can prove misappropriation either through improper disclosure or use in competition.  In the software context, Courts recognized as a secret the manner in which non-secret computer programs interact. Integrated Cash Management, 920 F.2d at 174.

Confidential information may be protected through contracts with employees and individuals with access to such information.  Carefully drafted non-compete agreements, non-disclosure agreements and strict policies regarding access to such information may help to protect trade secrets.  Trade secrets can be very valuable as they may extend for an indefinite period of time, as opposed to patents which expire after a set period of time.  However, trade secrets do not protect against a third party independently creating and using a trade secret.  If a trade secret is acquired by improper means (such as reverse engineering or espionage) the acquirer may be subject to legal liability for that improper acquisition.  A trade secret holder, though, must take reasonable steps to maintain its secrecy.  Meredith & Keyhani, PLLC frequently consults on steps that may be undertaken to protect trade secrets.