I Have a Secret? Applying the Uniform Trade Secrets Act to Confidential Information That Does Not Rise to the Level of Trade Secret Status

By Piper, Julie | Marquette Intellectual Property Law Review, Summer 2008 | Go to article overview

I Have a Secret? Applying the Uniform Trade Secrets Act to Confidential Information That Does Not Rise to the Level of Trade Secret Status


Piper, Julie, Marquette Intellectual Property Law Review


INTRODUCTION
I. THE HISTORY AND DEVELOPMENT OF TRADE SECRET LAW
     A. Sources of Trade Secret Law
     B. Classification of Confidential Information
II. HOW COURTS HAVE DETERMINED WHETHER THE UTSA ABROGATES CLAIMS
     A. Category One Analysis
     B. Category Two Analysis
     C. Category Three Analysis
III. BALANCING COMPETING INTERESTS
IV.  HOW TO PROTECT CONFIDENTIAL INFORMATION NOT DEEMED TO BE A
     TRADE SECRET UNDER THE UTSA
CONCLUSION

INTRODUCTION

The Uniform Trade Secrets Act ("UTSA") is a uniform law that serves as a guide for states to use when drafting their own respective trade secret legislation. (1) Because the UTSA is merely a guide, even after its enactment, state legislatures were, and still are, free to choose which sections of the UTSA to adopt within their respective states. (2) As a result, some states have adopted the UTSA as written, while others have made alterations by leaving some sections out. In general, seven states adopted the original 1979 version of the UTSA immediately upon enactment, and thirty-nine states and the U.S. Virgin Islands adopted the UTSA with the 1985 amendments. (3) Additionally, both the New York and New Jersey legislatures are considering whether to adopt pending versions of the UTSA. (4) In general, the UTSA has been widely adopted.

In spite of the National Conference of Commissioners on Uniform State Laws' ("NCCUSL") best attempt to (1) promote even development of trade secret law, and (2) relieve the uncertainty surrounding trade secret protection, ambiguity and uncertainty persist within trade secret law. More specifically, judicial disputes regarding what exactly constitutes a trade secret and how to protect confidential information that does not quite rise to the level of a trade secret have arisen within the context of employer-employee relationships. (5) Several courts throughout the country have held that the UTSA does not abrogate all other civil remedies based on the misappropriation of confidential information if a court deems that the information is not a trade secret. (6) In other words, some courts have held that an employer may only bring a claim under the UTSA for the misappropriation of information legally defined as a trade secret. As a result of this interpretation of the UTSA, businesses are free to bring a variety of other civil tort claims for the misappropriation of information that falls just short of trade secret status. Other courts, however, have held that the UTSA does abrogate other civil tort remedies based on the misuse of confidential information deemed not to be a trade secret. (7) As a result of these conflicting judicial opinions, the type of information that departing employees are free to use is unclear. Consequently, the result of these conflicting interpretations of the UTSA may have a detrimental effect on employees, employers, and even competing businesses.

In general, then, courts and legislatures need to determine whether the UTSA should allow, under its umbrella, "a claim that a defendant has misused commercial information that is not a trade secret." (8) This question may seem to be of little consequence in practice; however, as Attorney Tait Graves points out in his analysis of California trade secret and tort law, there are significant public policy implications resulting from this interpretation of the UTSA. (9) If the UTSA abrogates other tort claims for the misappropriation of information deemed not to be a trade secret, employees will be afforded much greater protection because claims for such misappropriation would be limited to only those claims allowed under the UTSA. (10) This interpretation of the UTSA would also further the overall public policy supporting a mobile workforce by preventing departing employees from being overly concerned about using marginally confidential information or information deemed to be general knowledge. (11)

In general, "the degree to which individuals and [competing] businesses . …

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