What Is the Uniform Trade Secrets Act (UTSA)?

The Uniform Trade Secrets Act (UTSA) is a model act that provides information on how long trade secrets can be maintained as well as information regarding the judicial process to which one is entitled if someone knowingly violates or misuses trade secrets. Model acts are drafts of legislation that US states can use as an example for their own laws. A trade secret, as proposed by the UTSA, can be many different things: an idea, a product, a formula, a piece of writing, or other things that if stolen could reasonably deter the profits of a company. In addition to defining the term, the UTSA outlines what it means to misappropriate, or misuse, a trade secret and what remedies are available for such misappropriations.

Trade Secrets

A trade secret can be any piece of information that should be kept private, because it's publicity could potentially cause financial ruin for a company. Some examples of trade secrets include such information as a company's sales methods, distribution methods, customer profiles, or advertising techniques. A trade secret does not, however, have to be used as part of the business of the person who holds it to be considered misappropriated.

The UTSA defines a trade secret with three pieces of criteria:

• It cannot be so general that others could easily arrive at the same knowledge.

• The person holding the secret must take reasonable means to protect it.

• The secret must have an economic value, as this last is the only means by which others can be held liable for obtaining and using the trade secret.

Violation of the Act

The UTSA may be violated in several ways. First, a person may willingly steal trade secret information or accept information that is known to be stolen. According to the UTSA, it is illegal to use protected information that is gathered from a friend, deliberately stolen, or obtained through blackmail. If a trade secret is stolen, then persons benefiting from the theft may need to reimburse the company that initially possessed the secret. Such theft is not only punishable by civil law, but is also now criminal behavior as defined by the Economic Espionage Act of 1996; punishment for stealing trade secrets include paying fines and serving jail time.

How to Protect Trade Secrets

Trade secrets can be protected for an unlimited amount of time because there are no procedures or registrations necessary to provide protection. Instead, trade secrets are protected by a bond of trust between employees of a company and understanding of the definition and misuse of trade secrets. There are some steps to take in order to protect trade secrets:

• Do not make trade secrets known to everyone; they should only be made known to as few people as possible, and only when necessary.

• When telling others a trade secret, they should be informed that the information is confidential. It can also be beneficial for secret holders to understand what a trade secret is and what it means to misappropriate such information.

• One way of ensuring that a person is aware of the need to keep information private is to sign all parties involved sign a confidentiality agreement. This agreement should go over the definition of a trade secret as well as the need to keep the information confidential.

• Remind those involved often of what information is considered confidential.

History

The UTSA first came into being in the 1970s, and was written by the National Conference of Commissioners on Uniform State Law. It was particularly important to propose a law that could be applied uniformly across the states, since sometimes trade secrets would be illegally used in state that made no provisions for their misuse. When no provision were made, some companies were able to willfully steal and profit from the inventions of others, thus the act has helped reduce the amount of violated trade secrets.

Revisions to the Uniform Trade Secrets Act have been made several times, largely to expand of the original definitions. As of 2011, 45 states, the District of Columbia, Puerto Rico, and the US Virgin Islands have adopted this act. The five states that have not adopted the act include Massachusetts, New Jersey, New York, Pennsylvania, Tennessee, Texas, and Wyoming. States that do not incorporate the act follow common law principles, or laws that come from other state laws and court decisions.

Written by Tricia Ellis-Christensen