Keeping the Secret Mix a Secret

AuthorKim R. Jessum
Published in Landslide, Volume 14, Number 2, 2022. © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the
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marketing, research and development, and
engineering. A representative from IT is also
preferred. During the meeting, key trade
secrets should be identied by evaluating
the type of information; current measures
used for protection, including IT, security,
and access; duration of usefulness; difculty
for preventing loss; and damage suffered
if lost. The damage includes lost revenue,
disruption to business, and tarnished
Once the key trade secrets are identied
with their required protections and values,
the trade secret policy should be created
and implemented to protect those key trade
secrets. In the policy, the different levels of
protection needed for key trade secrets and
different types of proprietary and con-
dential information need to be addressed.
More resources should be provided for the
higher-level protection. The policy should
include requirements for nondisclosure
and noncompete agreements, as well as
condentiality provisions in appropriate
agreements. It is recommended that con-
dentiality agreements have, if appropriate,
no reverse engineering clauses, obligations
for return or destruction of informa-
tion, marking requirements, and use for a
limited purpose. Trade secrets should not be
disclosed unless absolutely necessary, and
if so, the term of protection should be as
long as the trade secret is a trade secret. One
recent trend is to just list trade secrets in the
denition of condential information, but
that should be avoided as trade secrets and
condential information should be treated
differently, and similar treatment could lead
to problems with proving protection under
reasonable measures.
An assessment of the threat and vulner-
ability of theft is also helpful. Who are the
actors that may steal the information? Are
they customers, contractors, or supply
chain or business partners? Are there risks
It has been ve years since the enactment
of the Defend Trade Secrets Act (DTSA),
so it is worth reecting on the importance
of protecting trade secrets. Trade secrets
are often an important part of a compa-
ny’s intellectual property assets and must be
protected accordingly. Although companies
have been protecting trade secrets for many
years (e.g., the extreme level of protection
of the infamous Coca-Cola® recipe), lately,
there has been more emphasis on protect-
ing them on a global level, resulting in the
enactment of laws and stricter enforcement
by government agencies.
In the U.S., we have had state laws
modeled after the Uniform Trade Secrets
Act, but it was not until the enactment of
the DTSA that a federal law was specically
directed to trade secrets. The DTSA was
introduced by Congress to provide more
uniformity, and after ve years, companies
should nd more consistency in enforce-
ment in the federal courts.
Outside of the U.S., there are similar
laws. For example, the European Union
(EU) Directive on the Protection of Trade
Secrets of 2016, which has similar require-
ments for companies to protect their trade
secrets, was created to harmonize the
national laws of the EU by 2018. China
followed suit by adding 2019 amend-
ments addressing trade secrets to the PRC
Anti-Unfair Competition Law and a 2020
agreement to harmonize trade secret laws
in the Economic and Trade Agreement
between the U.S. and China. China does
not yet have a unied trade secret law.
The DTSA, as well as some of the non-
U.S. laws, provides protection for trade
secrets where the owner has taken reason-
able measures to keep the information
secret and the information derives inde
pendent economic value. The act provides
several remedies, including injunctive relief,
monetary damages, treble damages for
bad faith or willful prosecution, prevailing
party attorney fees for bad faith or will-
ful misappropriation, and ex parte seizure.
Other countries have had the option of ex
parte seizure, which allows a court to seize
property without consent, but this was
new to the U.S. with the enactment of the
DTSA. Ex parte seizure can be quite helpful
to companies that want to terminate further
use of their stolen trade secrets, and having
U.S. marshals raid a competitor’s facility
will certainly disrupt its operations.
The DTSA may be used to pursue action
for theft and misappropriation by foreign
actors. Especially for companies operating
globally, the DTSA has been effective for
enforcement against non-U.S. entities.
Because the DTSA and other laws
require the use of “reasonable measures”
to protect trade secrets, it is important for
companies to have a trade secret policy. In
creating the trade secret policy, it is neces-
sary to analyze what already exists. Even
for those companies that do not have a
formal policy, there are usually at least
some protections in place. Some businesses
already limit the number of employees who
have access to trade secrets, have agree-
ments to protect proprietary information,
and employ software to track and prohibit
access to certain information.
A determination of what proprietary
information needs to be protected as a trade
secret should also be conducted. It is not
practical to protect all company informa-
tion as a trade secret, and the information
that rises to the level of a trade secret must
have economic value. A useful exercise is
to have a meeting with several high-level
employees representing different aspects
of the business, such as finance, sales/
By Kim R. Jessum
Keeping the Secret Mix a Secret
Kim R. Jessum is chair of the ABA Section
of Intellectual Property Law. She is chief
IP counsel US, associate general counsel,
and secretary at Heraeus Incorporated
and VP legal at Heraeus Medical
Components. She can be reached at kim. (Continued on page 56)

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