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There are Remedies for the Theft of Commercial Secrets


April 22, 2015

After many months of debate, there remains uncertainty over whether Congress will enact a federal Trade Secrets Act bringing uniformity to an area that has historically been governed by state law. While many companies are pondering what they might do differently to protect their commercial secrets if such a law is passed, it is important to understand and take advantage of the options that exist today to protect vital trade secrets and other proprietary and confidential information.

While forty-seven states (all but Massachusetts, New York, and North Carolina) and the District of Columbia have adopted a version of the Uniform Trade Secrets Act ("USTA"), there are often material differences in how the states did so. Despite these differences, employers' trade secrets are already provided with at least some protection in almost all states. However, because of the differences in state laws, employers should determine the level of protection their trade secrets currently have under the version of the Act that exists in the states where they have employees. Failure to do so could leave significant gaps in protection, which many hope Congress is able to resolve through a federal act.

Even when a state has adopted the UTSA, many employers conclude that it does not provide all of the protection an employer needs. In such instances, consideration should be given to having employees sign non-disclosure agreements. By tailoring these agreements to the specific types of confidential information to which each employee has access, employers can obtain significant protections beyond that which the UTSA provides. Indeed, even if Congress passes a federal Trade Secrets Act, non-disclosure agreements will continue to play an important role in protecting employers' sensitive information, particularly information that may not rise to the level of a trade secret.

Finally, depending on the circumstances, employers may be able to bring a number of additional claims when their trade secrets are stolen. When secrets are stolen from the company's computer systems or sent by e-mail, for example, the federal Computer Fraud and Abuse Act may apply. And many states also provide claims for conversion, unfair competition, tortious interference with business relations, unjust enrichment, and fraud. Thus, depending on the jurisdiction and the facts, employers currently have several options to protect their trade secrets.