What are “reasonable measures” to protect trade secrets?

The value of a trade secret lies in its secrecy.  As a result, owners of trade secrets must take “reasonable measures” to protect their trade secrets and keep them secret. 

Specifically what conduct will meet the “reasonable measures” standard can vary with the circumstances.  At a minimum, a trade secret owner must ensure that the trade secret is not disclosed, without protections, to someone who can make commercial use of it.  For example, software companies frequently claim trade-secret protection in their proprietary source code.  Unrestricted disclosure of the source code to a computer programmer would destroy trade-secret status.  Trade-secret status could survive disclosure to someone with no computer science or programming expertise, however, if that person would be unable to make commercial use of the source code.

Of course, disclosure of a trade secret is sometimes necessary to commercialize it.  In that situation, reasonable measures can include requiring those who receive the trade secret to sign non-disclosure agreements or otherwise ensuring that they cannot use or disclose it except as authorized.  Owners will often also label their trade secrets with a legend – such as “confidential” or “proprietary” – that indicates trade-secret status. 

Limiting disclosures of the trade secret to those with a “need to know,” restricting employees’ access to the trade secrets, and storing the trade secrets behind lock-and-key – whether digitally on a secure computer system or physically in a locked room, file cabinet, or safe – can also qualify as “reasonable measures” to maintain secrecy.

Ultimately, trade secret owners are not required to store their trade secrets behind an impenetrable fortress.  But more extensive efforts to keep the trade secret a secret will decrease the likelihood that the trade secret is misappropriated and strengthen the owner’s trade-secret claim if misappropriation does occur.

To learn more about trade secrets and related business disputes, go to www.mololamken.com and follow us on LinkedIn.  “Brilliant lawyers with courtroom savvy” – Benchmark Litigation.  Copyright MoloLamken LLP 2022.

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