24. The Elements of a Trade Secret

International News Service v. Associate Press involved legal rights in intangibles that were largely defined in the context of that specific litigation–so much so that the Court coined a term, quasi-property. But most rights in creative intangibles are much more formally defined. This allows people to have a clear understanding of what is encompassed by the intellectual property right.

We’ll begin our study of these rights with something that is not so far off from the legal theory in INS v. AP: misappropriation of trade secrets.  These laws govern information—in particular, economically valuable information that its creator would prefer to keep secret.

Secrecy, by itself, is a relatively easy concept: if you don’t tell anyone about information that only you possess, it’s difficult for other people to know it. The problem is that information that is not shared with anyone else is of relatively little value, and it is extremely difficult to build a business of more than one person without sharing economically valuable information.

Employing contracts—specifically, non-disclosure agreements—is one way to limit disclosure. But as you learned in contract law, contracts aren’t perfect mechanisms: they necessarily are unable to deal with every possible situation, they rely on the prognosticating ability of the parties at the time the contract was created as opposed to their knowledge at the time of alleged breach, they can be both over- and under-restrictive of the parties’ activities, and they require that the parties actually have entered into a contract with relevant provisions.

Trade secret law largely fills these gaps. It begins by defining the concept of trade secrets, differentiating between information that is protectable and that which is not. It then provides a tort-based cause of action for the owner of trade secrets as against a person who misappropriates those secrets.

Trade secret law has historically been governed by state law, modeled after the Uniform Trade Secrets Act (UTSA) (most states) or the relevant provisions of the Restatement (Second) of Torts. The UTSA is available at on the Uniform Law Commission’s website, https://www.uniformlaws.org/ (search for “Uniform Trade Secrets Act”). In 2016, however, Congress enacted the Defend Trade Secrets Act. The DTSA provides a federal cause of action for trade secret misappropriation. It largely mirrors the UTSA and general principles of trade secret law, so while neither case involves the DTSA, the basic component of the law are the same.

The Federal Defend Trade Secrets Act was signed into law by President Obama in 2016. It is codified at 18 U.S.C. § 1836, et seq. The specific portions that we’ll refer to are excerpted below.