The [Trade] Secret Is Out: What All Government Contractors Need To Know About Proposal Information And The Uniform Trade Secrets Act

In a time of shrinking budgets and contracting opportunities, government contractors should be aware that the information compiled in their proposals has grown increasingly more valuable. Fortunately, the Uniform Trade Secrets Act (UTSA) is a tool contractors can use to protect their trade secrets, but they must employ basic protections by:

Always marking their proposal documents with restrictive legends; Imposing restrictions on subcontractors' or consultants' use of trade secrets; Requiring each employee to execute a nondisclosure agreement; and Carefully checking to ensure former employees do not make unauthorized disclosures of trade secrets, including proposal information. Overview of Risks of Disclosure of Trade Secret Information

Every day, hundreds of government contractors submit proposals in response to various government solicitations - the culmination of a process that may involve months, if not years, of research and planning, the expenditure of significant amounts of money, and the participation of multiple individuals. Of course, one of the risks of such a process is that a former employee may misappropriate a contractor's proposal information, either in whole or in part by, for example, refusing to return certain data when leaving the company, distributing such information without the proper permissions to his/her new employer, and/or subsequently using such information in a competitor's proposal. In such instances, the contractor's options for legal recourse may depend upon one key issue - whether the contractor's proposal qualifies as a trade secret. Under the Uniform Trade Secrets Act, it likely does and, thus, the contractor may sue the former employee and his new employer for misappropriation of a trade secret.

Compilation of Information is a Trade Secret

The UTSA is an act that has been adopted in 47 states(Massachusetts is currently contemplating its implementation), the District of Columbia, Puerto Rico, and the U.S Virgin Islands, and while each state's/territory's version may vary slightly, the essential parameters are the same. Specifically, the UTSA defines "trade secret" as:

[I]nformation, including a formula, pattern, compilation, program, device, method, technique or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii)...