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Chicago, IL
53 West Jackson Blvd
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Illinois 60604
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In essence, this list boils down to:  a trade secret is a confidential piece of information which is actively, effectively and properly protected and which only very few people inside the business have access to or knowledge of, and which possesses real economic value, and would be hard, if not impossible for a curious competitor to recreate without being, in some way, assisted or tipped off.

Example Categories of Trade Secrets

The following are examples of some of categories in which trade secrets commonly exist:

Misappropriation

Misappropriation is the improper acquisition and use of material which falls under trade secret protection.  Trade secret cases are frequently complex actions that are filled with subtle distinctions.

Frequently, in the cases involving ex-employees, the ex-employee will claim that he or she did not reveal their former employer's trade secrets, but rather, simply relied on their own general knowledge, skills and experience.  This claim can be a very effective defense as the courts realize that there must be some room for allowing people to take new jobs.

Elements of Misappropriation

Under the Uniform Trade Secret Act, misappropriation means:

Third Party Liability

A party whose action satisfy the terms of misappropriation can incur liability for trade secret misappropriation.  Thus, even though a person did not commit the act of taking the trade secret from its owner, if that person knew or should have known from surrounding circumstances that a trade secret was being disclosed then that person will be held liable.

Memorization is not a Defense to Misappropriation

In attempting to push literalization too far, defendants in trade secret cases some times claim that a trade secret was never physically taken from their previous employer, but rather, that they simply memorized certain aspects of it.  This defense has been rejected repeatedly by the courts.  If the existence of a trade secret is established in court, claiming memorization of that secret in lieu of physically copying or taking it will not offer any defense.

Inevitable Disclosure Doctrine

A legal doctrine entitled the "inevitable disclosure doctrine" was developed by the courts in order to pre-empt the loss of trade secrets caused when a key employer is hired away by a competitor.  This doctrine recognizes that a company's ex-employee will inevitably disclose trade secrets to a competitor that has hired this employee.  The doctrine allows injunctive relief before there is any actual proof that trade secrets have in fact been disclosed.

In essence, this doctrine permits an employer to obtain legal relief based upon the threat of trade secret misappropriation by ex-employees. The federal courts have held that the central issue to a legal action to preserve trade secrets is not the intent of the ex-employee but whether or not a company's trade secrets are threatened under this doctrine.  The fact that the ex-employee could reveal trade secrets appears to be the triggering action for legal relief.  Consequently, businesses now have a valuable and powerful legal tool with which they can quickly and effectively fight the threat of misappropriation of their trade secrets by former employees.

Government Disclosure

Disclosing trade secret information to governments can be very risky.  Often, this information may become subject to being revealed through standard statutory action such as the Freedom of Information Act.  This Act requires that the U.S. government tender information which it holds, that is not classified, to a member of the public that makes a statutory request.  If a company or individual has previously disclosed trade secret information, this information may be revealed through this request.  If trade secret information must be revealed, such as in submitting a bid to a federal agency, care must be given in identifying that portion of the submitted materials which constitute the trade secrets.

The only way a private party will gain relief from such disclosure is if that party had a reasonable, investment-backed expectation of confidentiality. This expectation is usually only available if there is a statute expressly prohibiting the government agency from disclosing the trade secret.

International Protection

Globalization of our markets requires even the small manufacturer or entrepreneur to be aware of and prepare for trade secret protection on an international basis.

If a company cannot preserve its trade secrets as it moves into a country and the international markets the benefits of going global will quickly be replaced by a loss of competitiveness.

Fortunately, trade secrets are recognized around the world with many countries treating the theft of such secrets as a punishable crime.  International agreements further bolster the protections accorded to trade secrets.

NAFTA - North American Free Trade Trade Agreement

The U.S., Mexico and Canada are signatories to the North American Free Trade   Agreement (NAFTA) in late 1992.  NAFTA largely follows the tenets of trade secret law in the United States.  A trade secret under NAFTA is defined as commercially valuable information, which is not publicly known and the owner of which takes reasonable steps  to maintain the information's secrecy. 

The NAFTA members are responsible for protecting trade secrets and to prevent the unauthorized acquisition and use of materials that classify as trade secrets.  Among the available remedies in each of these countries, injunctions are required.

GATT - General Agreement on Tariffs and Trade

The major industrialized countries of the world are signatories to this Agreement.   Among the results from GATT was the creation of the World Trade Organization (WTO).   The World Trade Organization is charged with the development and administration of agreements and programs for the improvement of world commerce.   WTO has established an administrative process for resolving trade secret disputes it has also developed Trade-Related Aspects of Intellectual Property Rights, also known as "TRIPS".