Identifying and protecting employers' interests in trade secrets and proprietary information: every company has something that it hopes will give it an edge over the competition, and it's wise to protect this as a trade secret.

TO BE successful, companies must distinguish themselves in a marketplace saturated with consumer products and services. To do so, they must cultivate and maintain a client base and recruit, train and retain a skilled work force. They must do all this while keeping their trade secrets and proprietary information from their competitors--which isn't easy. Trade secret misappropriation is estimated to cost American companies more than $100 billion annually. (1)

Today's work force is increasingly transient. When coupled with the ease of electronically storing, copying and transmitting information, the fact that a company's most valuable and skilled employees are also the most mobile presents companies with a Catch-22. How does it provide employees with trade secrets and proprietary information to facilitate their work and the company's success, while at the same time protecting itself against the possibility that employees eventually may work for a competitor or start their own competing business?

IDENTIFYING TRADE SECRETS

In all American jurisdictions trade secrets are protectable through either statutory or common law. Forty states and the District of Columbia have adopted the Uniform Trade Secrets Act (UTSA). Two states (Massachusetts and Alabama) have separate statutes affording protection, and eight states protect trade secrets under common law (Michigan, Missouri, New Jersey, New York, Pennsylvania, Tennessee, Texas and Wyoming). Many states that have not adopted the UTSA rely on the definition of "trade secret" in the Restatement (Second) of the Law of Torts.

A. Defining "Trade Secrets"

Courts and writers have commented on the difficulty of defining "trade secrets." As the Fifth Circuit remarked, what precisely constitutes a "trade secret" is "one of the most elusive and difficult concepts in law to define." (2) A commentator states, ...

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