Also known as: trade secret · trade-secret · trade-secrets · trade secret law · misappropriation of trade secrets
Written by attorneys — see sources below.
Confidential commercial information that is not generally known and that confers a competitive advantage on its possessor. Protection requires reasonable steps to maintain secrecy and extends against misappropriation by improper means, with remedies including injunctions and damages for unauthorized use or disclosure.
True North Logistics sues Terra Financial over a disputed logistics algorithm. During discovery Terra moves for a protective order after True North seeks internal testing data. The court grants the motion and orders that the data be revealed only to designated counsel and experts under seal.
Titan Industries receives a subpoena from a competitor demanding production of its proprietary manufacturing process. Titan moves to quash. The court grants the motion because compliance would disclose confidential research and development information without adequate safeguards.
TechVista Solutions holds a valuable encryption formula. A federal agency requires disclosure of the formula as a condition of obtaining a license and then uses the information in its own procurement. TechVista sues alleging a taking of its property interest in the secret.
Talia Torres, a former officer of Titan Industries, seeks production of internal legal memos in a shareholder suit. The company resists, citing risk that the documents would reveal trade secrets. The court balances the need for the information against the potential harm from disclosure.
Stockholders of First American Life Insurance Company of Alabama brought, in the Northern District of Alabama, a class action against the company and its directors, officers, and controlling persons. They alleged violations of the Securities Act of 1933, the Securities Exchange Act of 1934, SEC Rule 10(b)(5), the Investment Company Act of 1940, the Alabama Securities Act and common law fraud, seeking to recover the purchase price which they and others similarly situated paid for their stock in FAL. They also asserted a derivative action claiming that FAL was itself damaged by alleged fraud in the purchase and sale of securities. FAL filed a cross-claim against all other defendants, asserting in its own behalf the rights the plaintiff shareholders had claimed in the derivative aspect of their complaint. R. Richard Schweitzer served as attorney for the corporation in connection with the issuance of the FAL stock here involved. After the transactions sued upon were complete he became its president. On deposition Schweitzer was asked numerous questions concerning advice given by him to the corporation about various aspects of the issuance and sale of the stock and related matters. Other questions went into the content of discussions at meetings attended by him and company officials and information furnished to him by the corporation. All questions related to times at which Schweitzer acted solely as attorney, before he became an officer of the company and before the filing of suit. The plaintiffs had served a subpoena duces tecum on Schweitzer to bring various documents to the taking of his deposition. Both he and the corporation claimed the privilege with respect to some of the documents. The District Court treated the subpoena as though it were a motion to produce under Rule 34. The District Judge held that the privilege is not available to the corporation as against these plaintiff stockholders. Contemporaneously the District Judge ordered the case transferred to the Southern District of Alabama under 28 U.S.C. § 1404(a). With respect to both orders he entered appropriate findings pursuant to 28 U.S.C. § 1292(b), the interlocutory appeal statute. This court granted applications to allow both interlocutory appeals — the plaintiffs from the transfer order, docketed as No. 26168, and the defendants from the order denying the claim of privilege, docketed as No. 26266 — but provided that ultimate disposition of the appropriateness of interlocutory appeal would be taken with the case on the merits. Also the plaintiffs filed with this court a petition for a writ of mandamus directing the District Judge to retain jurisdiction of the case in the Northern District. The court has concluded that the consolidation of the two interlocutory appeals should be vacated. In this opinion we decide No. 26266, the interlocutory appeal of FAL on the privilege issue.
View caseTristan Thompson and Terra Financial agree to arbitrate a contract dispute involving proprietary software. The arbitration clause requires all proceedings to remain confidential. The arbitrator issues a protective order barring public disclosure of the software details to preserve their value.
Tori Taylor applies for a coastal development permit. The commission conditions approval on Taylor conveying an easement and also requires submission of proprietary site-survey data that constitutes a trade secret. Taylor challenges the data requirement as an uncompensated taking.
A plaintiff must show that the information is not generally known, confers a commercial advantage, and was subject to reasonable secrecy measures. The defendant must have acquired or used the information by improper means or in breach of a duty.
Courts may issue protective orders under Rule 26(c) that limit disclosure to specified persons, require sealed filings, or restrict the manner of revelation. Similar authority exists under Rule 45 to quash or modify subpoenas that would force disclosure.
Yes. When the government compels disclosure and then uses or disseminates the information in a way that destroys its economic value and interferes with reasonable investment-backed expectations, the Takings Clause may require compensation.
Courts may grant injunctions to prevent further use or disclosure and award damages measured by the plaintiff's loss or the defendant's unjust enrichment. Restitution of profits gained from the secret is also available.
Yes. Even without an express covenant, former employees may not disclose or use trade secrets learned during employment. This duty survives termination and supports injunctive relief when the information remains secret.
…(emphasis added), of obtaining registration of an insecticide would confer upon the Government a license to use and disclose the trade secrets contained in the application. Id. , at 1007-1008. See also Bowen v. Gilliard, ante , at 605. But the right to build on one's own property — even though its exercise can be subjected to…