Trade Secrets Law
Defend Trade Secrets Act, UTSA, misappropriation claims, and inevitable disclosure doctrine.
Overview
Trade secret law protects confidential business information that derives economic value from its secrecy. Unlike patents, which require public disclosure in exchange for a time-limited monopoly, trade secrets can be protected indefinitely as long as reasonable measures are taken to maintain their secrecy. The Defend Trade Secrets Act of 2016 (DTSA) created the first federal civil cause of action for trade secret misappropriation, supplementing state trade secret laws that had previously provided the primary legal framework.
Most states have adopted some version of the Uniform Trade Secrets Act (UTSA), which defines trade secrets broadly to include formulas, patterns, compilations, programs, devices, methods, techniques, and processes. Misappropriation occurs through improper acquisition, disclosure, or use of a trade secret. Remedies include injunctive relief, compensatory damages (including unjust enrichment), and exemplary damages for willful and malicious misappropriation.
The DTSA introduced an ex parte seizure provision allowing courts to order the seizure of property to prevent the dissemination of trade secrets in extraordinary circumstances. It also includes a whistleblower immunity provision protecting individuals who disclose trade secrets to government officials or attorneys for purposes of reporting suspected legal violations. The inevitable disclosure doctrine, recognized in some jurisdictions, allows employers to enjoin former employees from working for competitors when the new employment would inevitably lead to the use of the former employer's trade secrets.
Key Statutes
| Statute | Citation | Summary |
|---|---|---|
| Defend Trade Secrets Act of 2016 | 18 U.S.C. §§ 1831–1839 | Creates a federal civil cause of action for trade secret misappropriation, including ex parte seizure provisions and whistleblower immunity protections. |
| Economic Espionage Act of 1996 | 18 U.S.C. §§ 1831–1832 | Criminalizes the theft of trade secrets for the benefit of a foreign government (economic espionage) and commercial trade secret theft. |
| Uniform Trade Secrets Act (UTSA) | Uniform Law Commission (adopted in 48+ states) | Model act defining trade secrets, misappropriation, and available remedies including injunctions, damages, and attorney's fees. |
Key Cases
PepsiCo, Inc. v. Redmond
54 F.3d 1262 (7th Cir. 1995)
Applied the inevitable disclosure doctrine, enjoining a former PepsiCo executive from working for a competitor where disclosure of trade secrets was inevitable.
Kewanee Oil Co. v. Bicron Corp.
416 U.S. 470 (1974)
Held that state trade secret law is not preempted by federal patent law, allowing parallel protection for inventions that could be patented.
E.I. du Pont de Nemours & Co. v. Christopher
431 F.2d 1012 (5th Cir. 1970)
Held that aerial photography of a competitor's unfinished plant to learn its manufacturing process constituted improper means of acquiring trade secrets.
Waymo LLC v. Uber Technologies, Inc.
No. C 17-00939 (N.D. Cal. 2018)
High-profile DTSA and state trade secret case involving alleged theft of autonomous vehicle technology, settled for approximately $245 million in equity.
Key Regulations
DTSA Whistleblower Immunity Notice Requirements
Department of Justice
Requirement that employers provide notice of DTSA whistleblower immunity in any contract or agreement governing trade secrets or confidential information.
Export Administration Regulations — Technology Controls
Bureau of Industry and Security (15 CFR Parts 730–774)
Export controls on technology and technical data that may overlap with trade secret protections, particularly for dual-use technologies.
Common Issues
- Defining what constitutes a protectable trade secret
- Proving reasonable measures to maintain secrecy
- Employee mobility and non-compete agreement enforcement
- Inevitable disclosure doctrine applicability
- Computer forensics and evidence preservation in theft cases
- Calculating damages for trade secret misappropriation
- Ex parte seizure orders under the DTSA
- International trade secret theft and cross-border enforcement
State Variations
Nearly all states have adopted the UTSA, but with significant variations. New York, notably, has not adopted the UTSA and relies on common law trade secret protection. The inevitable disclosure doctrine is accepted in some states (Illinois, Texas) but rejected in others (California, Maryland). Non-compete agreement enforceability varies dramatically — California broadly prohibits non-compete agreements (with narrow exceptions), while most other states enforce reasonable non-competes. Some states require consideration beyond continued employment for non-competes. Attorney's fees provisions differ by state version of the UTSA. The FTC's proposed federal ban on non-compete agreements (currently in litigation) would further impact trade secret protection strategies.
Resources
Sedona Conference Working Group 12 on Trade Secrets
Legal think tank producing best-practices guidelines and commentary on trade secret law, including reasonable measures frameworks.
FBI Counterintelligence Division — Economic Espionage
Federal law enforcement resource for investigating trade secret theft, particularly cases involving foreign governments or agents.