Unlike other areas of intellectual property law, the law of trade secrets is not federally regulated. Some states have adopted the Uniform Trade Secrets Act, while others have chosen to enact their own trade secret statutes. In Pennsylvania, trade secrets are protected under common law. The Pennsylvania Supreme Court has adopted a definition of trade secrets as consisting of “any formula, pattern, device or compilation of information which is used in one’s business, and gives him an opportunity to obtain an advantage over competitors who do not know or use it.”
Suppose you own a business which sells machine parts, and over the years you have developed customer lists that are unique to your business and not easily ascertainable by referencing trade directories, journals or the like. Under Pennsylvania law, such customer lists are trade secrets if the business takes sufficient measures to maintain their confidentiality.
Or, suppose your business manufactures spaghetti sauce and you wish to keep your unique recipe from your competition. Factors the courts may consider to determine whether your recipe constitutes a trade secret are: the extent to which the recipe is known outside your business, the extent to which it is known by your own employees, the value of the recipe to your business and to your competitors, the amount of time, effort and resources spent to develop the recipe, the level of difficulty others would have to replicate it, and the measures you have taken to maintain the secrecy of the information.
Once you’ve determined that your information constitutes a trade secret, it is essential to protect it. Unless the trade secret information has been maintained in confidence, the courts will not enforce your rights in that information. As soon as the trade secret is made known to the public your rights are lost. Therefore, your business must have a system to prevent the confidential information from becoming publicly disseminated. While absolute secrecy is not required, relative secrecy must be shown. The courts have found the following methods acceptable to maintain the confidentiality of trade secrets:
Employment agreements containing confidentiality (non-disclosure) clauses;
Entrance and exit interviews reinforcing the duty to maintain confidentiality upon hiring and termination of employment;
Restricting certain areas within the business facilities;
Marking information “confidential”;
Keeping sensitive information under lock and key and subject to limited access.
Not all disclosure of trade secret information will compromise the nature of the information. For example, under certain circumstances, trade secrets disclosed within a confidential relationship remain enforceable.
Furthermore, all may not be lost if the information is publicly disclosed. If the information is disclosed wrongfully by one who has used unlawful means to procure the information or has breached a duty created by contract or implied in law, the owner may have a cause of action for misappropriation of trade secret.
As you can see, the term “trade secret” is clearly not a misnomer. If you want to maintain your rights in your unique information, you must keep it secret.
– Denise Ciampitti