The Massachusetts Trade Secrets Act, Four Years On: What To Know

• Published date: 15 November 2022
• Subject Matter: Intellectual Property, Trade Secrets
• Law Firm: Seyfarth Shaw LLP
• Author: Ms Dawn Mertineit and Katherine Perrelli

This article was originally published in the Boston Bar Association's Fall 2022 Boston Bar Journal.

Just over four years ago, the Massachusetts legislature finally passed a bill long in the works addressing non-compete agreements and replacing the Commonwealth's trade secret misappropriation statute with a version of the Uniform Trade Secrets Act (the "UTSA"), referred to herein as "MUTSA." See M. G. L. c. 93, § 42-42G. While the Commonwealth's "new" non-compete law has received the most attention, the adoption of the UTSA was also notable. Even though Massachusetts is the 49^th state to adopt the UTSA, MUTSA differs from other states' versions of the UTSA. This piece will discuss the differences in pre- and post-MUTSA jurisprudence and what issues may be implicated by the law.

Comparing the text of MUTSA to its predecessor

Prior to MUTSA's enactment, parties alleging trade secret misappropriation relied on both common law and statutory law. Oddly enough, the pre-MUTSA statute never specifically defined "misappropriation." Instead, the statute provided that anyone who "embezzles, steals or unlawfully takes, carries away, conceals, or copies, or by fraud or by deception obtains" a trade secret "with intent to convert to his own use," regardless of the value of the trade secret, is liable for the resulting damages. In contrast, MUTSA provides a specific (albeit lengthy) definition of "misappropriation":

(i) an act of acquisition of a trade secret of another by a person who knows or who has reason to know that the trade secret was acquired by improper means; or

(ii) an act of disclosure or of use of a trade secret of another without that person's express or implied consent by a person who

(A) used improper means to acquire knowledge of the trade secret or

(B) at the time of the actor's disclosure or use, knew or had reason to know that the actor's knowledge of the trade secret was

(I) derived from or through a person who had utilized improper means to acquire it;

(II) acquired under circumstances giving rise to a duty to limit its acquisition, disclosure, or use; or

(III) derived from or through a person who owed a duty to the person seeking relief to limit its acquisition, disclosure, or use; or

(C) before a material change of the actor's position, knew or had reason to know that it was a trade secret and that the actor's knowledge of it had been acquired by accident, mistake, or through another person's act described in clause (A) of paragraph (ii) or subclauses (I) or (II) of clause (B) of said paragraph (ii) of the definition of Misappropriation.

Similarly, the definition of a "trade secret" in the pre-MUTSA statute merely refers to another statute,M. G. L. c. 266, § 30, which defines a trade secret as "anything tangible or intangible or electronically kept or stored, which constitutes, represents, evidences or records a secret scientific, technical, merchandising, production or management information, design, process, procedure, formula, invention or improvement." MUTSA, meanwhile, defines "trade secrets" as:

specified or specifiable information, whether or not fixed in tangible form or embodied in any tangible thing, including but not limited to a formula, pattern, compilation, program, device, method...