State v. Federal Trade Secret Laws (Virginia Trade Secret Act, Uniform Trade Secret Act and Defend Trade Secret Act)

For years I have advised Virginia employees to calm down when it comes down to Trade Secret issues. 

Well, I hope I haven’t been that passive aggressive in my advice. My intent has always been to provide employees with a simplified understanding of what their legal rights and obligations are regarding their employer’s trade secrets. And in order to do that, I over simplify. 

For years, I have advised the following:

  • All confidential information is not considered trade secret
  • When you leave, leave all secret and confidential information – don’t take copies (and that includes keeping electronic copies)
  • Assume your company considers all confidential information to be trade secret
  • Also assume your company is wrong – not all confidential information is considered to be trade secret
  • Realize the courts will ask three important questions, in determining whether the information is really a Trade Secret  
    • A trade secret is that which is kept secret with efforts made toward it’s secrecy 
    • A trade secret has value to the company
    • A trade secret is not generally known or knowable to the public

Is my office manager’s hourly rate a trade secret? Sure, we would like for it to be confidential – but it does not meet any of the three questions penned above? Of course not. It’s therefore not a trade secret. 

Is my marketing plan for 2018? Maybe. If I send it to three PR firms and ask for their input, do you think it can be deemed a trade secret then? No. Not likely. 

Is the code for a new attorney client communication App my firm is developing likely a trade secret? It might be. Depends on who is developing it and who has access to it. 

Generally, the rule of thumb is that judges decide what is and what is not a trade secret, and if the information can be obtained from a third source (vendor, internet, public bid, patent, etc.) it is not likely given trade secret protection. 

The above advice has for years applied to Virginians under state and federal law as Virginia basically adopted the Uniform Trade Secret Act many moons ago. 

But in the last twelve months, we are seeing a slight shift in Trade Secret Law. In 2016 Congress enacted (yes, let’s pause and reflect on that truth. The legislative body in Washington actually wrote and passed a law in 2016) called the Defend Trade Secret Act (DTSA) that gives companies the right to seek protection (think injunction) of possible trade secret breaches in Federal Court with some speed and efficiency. 

Under the law, a company that feels a trade secret has been taken and misappropriated, can run to the Federal Court (which they may not have been able to do in the past) and seek a seizure order to enjoin future use, or sharing of the secret information. 

In trying to maintain my MO of keeping things simple, the law doesn’t change much of what Virginians are dealing with. It opens federal court house doors to actions that may have been limited to state court houses in the past, and does give companies a quick bite at the apple before expensive litigation begins. Other than how and where the actions can be enforced, the definition of what is a trade secret hasn’t changed. 

And my advice hasn’t really changed either. 

However, there are some great resources out there to help folks understand the issues in slightly more detail than this post.

9 page smart lawyer summary of Trade Secret Law – can be found here: http://www.ebglaw.com/content/uploads/2014/06/47227_PLC-Trade-Secret-Laws-Virginia.pdf

American Bar Association summary on DTSA – can be found here: https://www.americanbar.org/publications/blt/2016/09/03_cohen.html

Shortest blog post ever written on Virginia Trade Secret Law – can be found here: 

http://virginianoncompete.com/2010/01/22/virginia-trade-secret-act/

Lauren Ellerman

Lauren Ellerman

In 2011, Lauren Ellerman was named "Young Lawyer of the Year" by the Roanoke Bar Association for her work in the community. To speak with Lauren about your personal injury case, contact her at lellerman@frithlawfirm.com.