INTELLECTUAL PROPERT Y
Trade Secrets in the Digital World By CURTIS VOCK AND HANNAH LUTZ TRADITIONAL MEASURES HAVE DIGITAL ANALOGS
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atents and copyrights powerfully protect intangible rights, but they are time-limited and require public disclosure of protected material. Intangible information maintained as a trade secret lessens misappropriation risk so long as the information is subject to measures preserving secrecy. Trade secrets may thus be ideal for intellectual properties such as customer lists, chemical formulas, manufacturing processes, software programs, code, and digitally stored data. Maintaining adequate security measures, however, is crucial. Until recently, trade secrets were protected under a patchwork of state laws. Under the 2016 federal Defend Trade Secrets Act (DTSA), trade secrets are now also federally protected. Federal law is fairly consistent with the Uniform Trade Secrets Act (UTSA), which
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has been adopted by most states but allows owners of misappropriated trade secrets to sue in federal court. The DTSA includes an updated definition of information that may constitute a trade secret, including “programs” and “codes,” and endorses both physical and electronic storage of information. This language reflects the reality that proprietary information is increasingly stored and accessed digitally. As with any trade secret, digitally stored trade secrets must be subject to reasonable measures to preserve secrecy and cannot be generally “known.” For example, software code cannot be protected as a trade secret if it is composed merely of generally known elements without novelty; but the combination of public domain elements and digital data providing competitive advantage can be subject to trade secret protection.
Satisfying secrecy requirements for digitally stored information presents additional difficulty. Traditional measures, such as storing a secret formula in a guarded and locked safe, may not practically prevent unauthorized digital access. However, traditional measures can be analogized to the digital world. A company with software, source code or other digital information constituting trade secrets should develop strong cybersecurity procedures (including passwords and firewalls), keep its cybersecurity systems updated, and limit access of digital information to authorized users. Tiered levels of access and user permissions are particularly important so that only employees with needto-know status can access the confidential information. If a bad actor circumvents secrecy measures and accesses a trade secret, a suit for trade secret misappropriation may be applied, effecting injunctive relief for actual or threatened misappropriation, as well as recovery for damages. The DTSA does not preempt state law, so a plaintiff may sue based on DTSA and state law claims. It is now common to assert claims under both DTSA and UTSA. Remedying trade secret misappropriation through litigation, however, generally requires proving that the information falls BACK TO CONTENTS
