After an eavesdropping incident or any kind of information theft has taken place, it’s not enough just to claim then that proprietary information or trade secrets were lost.You must be able to establish in court not only that the information was considered a secret but also that reasonable measures had been taken to protect the information prior to the incident. Performing regular sweeps or communications security audits will help establish that fact if your case ever needs to go to court. It is the shareholders that require this element of protection. The articles below help point out some of the significance of trade secret protection.

Article from blogs.ParkerPoe.com

TRADE SECRETS CLAIM DISMISSED FOR FAILURE TO PLEAD “REASONABLE MEASURES” ELEMENT

Posted by Eric Welsh on Friday, October 4th
Recently, many of the battles in trade secret litigation in North Carolina have been fought over whether the trade secrets have been alleged with enough specificity to survive a motion to dismiss… in late July, the North Carolina Business Court reminds us all that all elements of the trade secrets claim must be pled with facts — even the ”reasonable measures” allegation.

In McKee v. James, 2013 NCBC 38 (July 2013), the North Carolina Business Court dismissed a claim brought under the North Carolina Trade Secrets Protection Act on the basis that the plaintiffs, shareholders of Lanness K. McKee & Co., Inc. (”McKee”), a manufacturer of boats for government and recreational use, had not alleged that McKee had taken “reasonable measures” to protect the secrecy of the information that Plaintiffs claimed as a trade secret.  In that case, the Plaintiffs alleged that information regarding the manufacture of McKee boats, including manufacturing processes and techniques, designs, molds and business plans, were trade secrets of McKee which the Defendants misappropriated.  The Defendants denied the allegations but also moved to dismiss the claims on two grounds:  first, that the Plaintiffs had failed to allege the trade secrets with enough specificity and second, that the Plaintiffs had failed to allege that McKee took reasonable measures to protect the secrecy of the information.   

[Read More- Parker Poe]

And this next article from IP Watchdog point out that similar requirements apply in other countries as well.  The rest of the article focuses on confidentiality and not-disclosure agreements with examples of a few significant cases where CEO’s left one company to work for a competitor.

Trade Secrets and Employee Mobility in the U.S. and Asia

Written by Chris Neumeyer Managing Partner of Asia Law

… Forty-eight states have adopted a form of the Uniform Trade Secret Act (UTSA), which defines a trade secret as any information that (a) derives economic value from being not generally known to the public and (b) is the subject of reasonable efforts to maintain its secrecy.  Illegal misappropriation includes acquiring secrets by one who knows or should have known the information was obtained by improper means, or disclosing or using the secrets without proper consent.

In Asia, trade secret protection is much newer, with most countries having enacted their first trade secret laws in the 1990s and 2000s in response to pressure from the U.S., particularly after those nations joined the Agreement on Trade-Related Aspects of IP Rights (TRIPs) and World Trade Organization (WTO).  Japan enacted its first significant trade secret legislation in 1990, South Korea in 1992, China in 1993, Taiwan in 1996 and Thailand in 2002.

Despite their late start, most countries in Asia define trade secrets similarly to the U.S.:

  • China’s Anti-Unfair Competition Law defines trade secret as any technical or business information that is not known to the public, has actual or potential economic value, practical applicability, and is the subject of reasonable efforts to maintain its secrecy.
  • Taiwan’s Trade Secret Protection Act defines trade secret as any method, process, formula, program, design, or information that may be used in production, sales, or business operations, is not generally known to the public, has actual or potential economic value, due to its secretive nature, and is the subject of reasonable efforts to maintain its secrecy.
  • Japan’s Unfair Competition Prevention Act defines trade secret as any technical or business information that is not known to the public, is useful for commercial activities, and is the subject of reasonable efforts to maintain its secrecy.
  • Thailand’s Trade Secrets Act defines trade secrets as business information that is not known to the public, derives commercial value from its secrecy, and is the subject of reasonable efforts to maintain the secrecy.

While the definitions of trade secret and misappropriation differ slightly in the U.S. and Asia (e.g., China and Japan impose an additional usefulness requirement), the similarities outweigh the differences.

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