Trade Secret Acts
Instability in the workforce (especially as regards key employees) subjects companies to risk of loss of confidential information. Most state jurisdictions grant protection to employers against such loss in their adoption of a version of the Uniform Trade Secrets Act.
A "trade secret” generally means information, including, but not limited to, a formula, pattern, compilation, program, device, method, technique, product, system, or process, design, prototype, procedure, or code that: (1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means, by the public or any other person who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Businesses are well advized to protect their trade secrets against use by employees, subcontractors, agents, etc. Such protection can be achieved in reliance on the Act, or through the use of more specific trade secret nondisclosure provisions in its contracts.
Where employees are concerned, a state's trade secrets act can be especially useful. Unlike a covenant not to compete, which must be reasonably restricted in time and geography, a trade secret generally endures and is protected and enforceable until it is disclosed or discovered by proper means.
Common-Law Trade Secret Protections
In addition to enforcement under a state's trade secret act, an employer may also rely on common-law rules where an employer and employee enter into a private agreement with respect to the creation and use of trade secrets. Where a written agreement exists, an employer and employee may generally expressly agree that an employee will assign all his or her creative output, include all trade secrets, to the employer, and that the employee will retain all such trade secrets in confidence.
In the absence of a written non-disclosure agreement, under common law:
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