Definition of Trade Secret

The touchstone of a trade secret is that it provides the owner of the information with a competitive advantage in their market.
Courts look at the cost of development, the difficulty in duplicating and measurable benefits to ascertain whether a bona fide trade secret exists.
The first step in the defense of a trade secret is to examine whether there is real economic value to keeping the information secret.

Trade secret laws, much like other types of intellectual property law, always have the potential to limit competition and restrict employee mobility. The result is that trade secret law can be used as a means to try to carve out a market space. Those cases, however, may involve benign information that is difficult to classify as a trade secret.

The first issue in the defense of any claim for misappropriation of a trade secret is to figure out if there is really a trade secret at issue, whether the claim is brought under the federal Defend Trade Secrets Act (DTSA), a state Uniform Trade Secrets Act (UTSA) (from which the DTSA was derived) or state common law.

The UTSA has now been enacted every state except New York and Virginia, as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Continue reading

To enforce a claim for misappropriation of a trade secret, the plaintiff must prove that the information was secret and valuable. Plaintiffs in New Jersey can rely on either the common law or the New Jersey Trade Secrets Act.
Secrets that have been publicly disclosed lose their their protection as trade secrets. Thus, the failure to secure a non-disclosure agreement with vendors or potential vendors could make it impossible to protect sensitive information in the future.
Once a trade secret has been publicly disclosed, even restrictive covenants and non-disclosure agreements executed by employees may lose their effectiveness as a means of protecting sensitive information.

One of the first obstacles that a company will encounter when trying to enforce its rights to protect confidential or proprietary information is whether the information is a trade secret. This is a threshold issue that is determined by the conduct of the party claiming the secret, sometimes as much by the sensitivity of the information.

If the information is in the public domain, or if the owner the information has not taken steps to protect the information from disclosure, under New Jersey law there is no trade secret to protect. That was the result in this case from New Jersey’s Superior Court.

Court Dismisses Trade Secret Misappropriation Claim

In a lawsuit brought against a New Jersey beauty supplier, a trial judge of the Superior Court dismissed claims asserting that a competitor had misappropriated its trade secrets and that its former employees were in breach of the confidentiality and non-solicitation provisions of restrictive covenants that they had executed.

The case, Ebin New York, Inc. v. Beauty Plus Trading Co., Inc., involved the formula for an adhesive hair spray that the plaintiff claimed was a trade secret. The plaintiff sued its manufacturer and Beauty Plus, along with individual defendants that the plaintiff alleged were bound by the agreements they had made as employees.

Articles Tagged with Definition of Trade Secret

Absence of Competitive Advantage – The First Line of Defense to Trade Secret Lawsuits

The touchstone of a trade secret is that it provides the owner of the information with a competitive advantage in their market.

Courts look at the cost of development, the difficulty in duplicating and measurable benefits to ascertain whether a bona fide trade secret exists.

The first step in the defense of a trade secret is to examine whether there is real economic value to keeping the information secret.

Prior Disclosure Kills Trade Secrets Claim

To enforce a claim for misappropriation of a trade secret, the plaintiff must prove that the information was secret and valuable. Plaintiffs in New Jersey can rely on either the common law or the New Jersey Trade Secrets Act.

Secrets that have been publicly disclosed lose their their protection as trade secrets. Thus, the failure to secure a non-disclosure agreement with vendors or potential vendors could make it impossible to protect sensitive information in the future.

Once a trade secret has been publicly disclosed, even restrictive covenants and non-disclosure agreements executed by employees may lose their effectiveness as a means of protecting sensitive information.

Court Dismisses Trade Secret Misappropriation Claim