Protecting Your Trade Secrets in the US

Remember earlier posts about non-disclosure agreements, and the role they play in defining and protecting trade secrets? Of course you do—but in case you don’t, one of them is here. I even drafted a brief two-page outline for NDAs, here.

The macro point of those posts, at least as to protecting trade secrets, is that in the US, a trade secrets owner must take all “reasonably available steps” to protect their trade secrets. In an unpublished opinion filed on May 8, 2015, the US Court of Appeals for the Eleventh Circuit held that (i) the absence of a written non-disclosure agreement is relevant to assessing whether a trade secret owner took all “reasonably available steps” to preserve the secrecy of an asserted trade secret; and (ii) verbal warnings regarding confidentiality will not suffice. The case is Warehouse Solutions, Inc. v. Integrated Logistics, LLC et al. and is available here.

Warehouse Solutions claimed trade secret protection for software it developed, but they never executed an NDA or any other agreement with Integrated Logistics as to the resale or other use of the software. Warehouse Solutions stated that they advanced password protection and encryption, and end-user confidentiality provisions which were all “reasonably available steps” to protect their trade secrets. The court disagreed, holding that Warehouse Solutions’ failure to require Integrated Logistics to sign a written agreement before granting them “high-level administrative access” to the software doomed Warehouse Solutions’ trade secret misappropriation claim.

The lessons from this case for Irish and Northern Irish companies?

  1. Always protect your trade secrets with a written NDA executed before disclosure.
  2. If in doubt, refer to point 1.
  3. Inventory your trade secrets, and be able to articulate how the information meets the statutory requirement of a trade secret in the US and identify what you have done to protect them.
  4. In the NDA, remember that trade secrets are a smaller subset of ‘confidential information’ and be sure to separately provide that trade secrets should be protected for as long as they remain trade secrets, which may be a longer period than other confidential information.