The Uniform Trade Secrets Act (UTSA) is a model act that outlines how long trade secrets can be kept and the judicial process for infringement. A trade secret can be any information that, if stolen, could harm a company’s finances. UTSA defines a trade secret with three criteria and outlines what misappropriation means. Violation of UTSA can result in fines and imprisonment. Trade secrets can be protected by a bond of trust among employees and confidentiality agreements. UTSA originated in the 1970s and has been revised several times. As of 2011, 45 states, the District of Columbia, Puerto Rico, and the US Virgin Islands have adopted it.
The Uniform Trade Secrets Act (UTSA) is a model act that provides information about how long trade secrets can be kept, as well as information regarding the judicial process one is entitled to if someone knowingly infringes or misuses trade secrets. Model Acts are draft legislation that states in the United States can use as an example for their own laws. A trade secret, as proposed by UTSA, can be many different things: an idea, a product, a formula, a piece of writing, or other things that, if stolen, could reasonably deter a company’s bottom line. In addition to defining the term, UTSA outlines what misappropriation or misuse of a trade secret means and what remedies are available for such misappropriation.
Trade secrets
A trade secret can be any information that should be kept private, because publicizing it could potentially cause a company’s financial ruin. Some examples of trade secrets include information such as a company’s sales methods, distribution methods, customer profiles, or advertising techniques. A trade secret, however, does not have to be used as part of the business of the person who holds it to be considered misappropriated.
UTSA defines a trade secret with three criteria:
It cannot be so general that others can easily arrive at the same knowledge.
The person who holds the secret must take reasonable measures to protect it.
The secret must have economic value, as economic value is the only means by which others can be held responsible for obtaining and using the trade secret.
Violation of the law
UTSA can be violated in several ways. First, a person may willingly steal trade secret information or accept information that is known to have been stolen. According to UTSA, it is illegal to use protected information that you collected from a friend, knowingly stolen, or obtained through blackmail. If a trade secret is stolen, the people who benefit from the theft may have to repay the company that initially held the secret. Such theft is not only punishable under civil law but is also criminal behavior as defined by the Economic Espionage Act 1996; Punishment for stealing trade secrets includes paying fines and imprisonment.
How to protect trade secrets
Trade secrets can be protected for an unlimited period of time because there are no procedures or records required to provide protection. Instead, trade secrets are protected by a bond of trust among a company’s employees and an understanding of the definition and misuse of trade secrets. There are a few steps you can take to protect trade secrets:
Do not disclose trade secrets to everyone; should be disclosed only to as few people as possible and only when necessary. When you disclose a trade secret to others, you must inform them that the information is confidential. It can also be helpful for secret holders to understand what a trade secret is and what it means to misappropriate that information. One way to ensure that a person is aware of the need to keep information private is to have all parties involved sign a confidentiality agreement. This agreement should address the definition of trade secret and the need to keep information confidential. Frequently remind affected individuals what information is considered confidential.
History
UTSA first originated in the 1970s and was written by the National Conference of Commissioners on Uniform State Law. It was especially important to propose a law that could be applied uniformly in all states, as sometimes trade secrets would be used illegally in a state that did not allow for their misuse. When provisions were not made, some companies were able to intentionally steal and profit from the inventions of others, so the act helped reduce the amount of trade secrets being breached.
Several revisions have been made to the Uniform Trade Secrets Act, largely to expand on the original definitions. As of 2011, 45 states, the District of Columbia, Puerto Rico and the US Virgin Islands have adopted this act. The five states that have not adopted the act include Massachusetts, New Jersey, New York, Pennsylvania, Tennessee, Texas and Wyoming. States that do not incorporate the act follow common law principles or laws that are derived from other state laws and judicial decisions.
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