California has a strong public policy in favor of open competition, and against non-compete agreements. However, the Company still has legal methods to protect its interests, investments and know-how. One of these methods is the “trade secret” doctrine. .
What is The Definition of a Trade Secret?
The UTSA defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: “(1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” [Civil Code § 3426.1(d) (emphasis added); see Whyte v. Schlage Lock Co. (2002) 101 CA4th 1443, 1452, 125 CR2d 277, 285]. The information need not be in writing but may be in the employee’s memory. Morlife, Inc. v. Perry (1997) 56 CA4th 1514, 1522, 66 CR2d 731, 736. Cal. Prac. Guide Employment Litigation Ch. 14-C.
Are Non-Disclosure Agreements Necessary to Protect Trade Secrets?
No. Nondisclosure agreements are not essential to obtaining judicial relief. Courts will prevent ex-employees from using/disclosing trade secrets under the tort of misappropriation of trade secrets even without a confidentiality or nondisclosure agreement. See Klamath-Orleans Lumber, Inc. v. Miller(1978) 87 CA3d 458, 465–466, 151 CR 118, 121. Cal. Prac. Guide Employment Litigation Ch. 14-C.
What Are Some Examples of Trade Secrets?
California case law has held that the following items may be trade secrets: (1) customer lists; (2) plans and designs for the Company’s product and (3) a construction company’s “project binders” for proposed projects. Other items may be held to be protected trade secrets as well.
We have represented clients in multiple matters where trade secret allegations were at issue.
If you have been threatened with trade secret violations or believe that you have potential trade secret claims against another party, it is important to act quickly. Please contact us today to start a conversation.