Legend has it that Coca-Cola keeps the formula for its globally popular soft drink locked away in a vault in Atlanta, Georgia. The formula is considered a trade secret, but what constitutes a trade secret and how do you protect it?
Missouri, like 48 other states and the District of Columbia, has adopted the Uniform Trade Secrets Act. The Missouri Uniform Trade Secrets Act (MUTSA) provides injunctive relief if the holder of a trade secret has that proprietary information stolen or misappropriated by another party and used for profit.
If you operate a business in Missouri and rely on what you consider a trade secret, what steps do you need to take to protect it? What are your options if it is stolen or otherwise acquired by another to their benefit?
Contact me at the Law Office of Julie Scott LLC if your business relies on a trade secret or other intellectual property and you want to understand and exercise your rights.
For years, I have been helping business owners in and around Kansas City, Missouri, and nearby in Columbia, Springfield, and Rolla, protect and defend their trade secrets from others. I can also help you take appropriate legal action when a trade secret is stolen or misappropriated by another party.
Mirroring the Uniform Trade Secrets Act, the Missouri version defines a trade secret as “information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, or process” that:
Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and
Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy
In other words, it cannot be a trade secret if someone else can readily ascertain it without having access to what you have figured out or constructed through your own efforts.
Overall, the MUTSA differs from the Uniform Trade Secrets Act in three ways:
It broadens the trade secret definition to include “technical or non-technical data.”
It alters the definition of “person” to include any other legal or commercial entity “whether for profit or not for profit.”
It extends the statute of limitations to five years instead of three.
Like Coca-Cola, you must exercise precautions to protect your trade secret. If you don’t and it falls into the hands of competitors who then profit from it, you may have no legal recourse. If a trade secret violation reaches the courtroom, you will have to prove that you took special measures to protect the information that was stolen or misappropriated. This means, among other steps:
You label your trade secret as such or use the terms “Proprietary and Confidential” in describing the information you regard as a trade secret.
You limit access to the information on a “need to know” basis and ensure it is not generally available to all employees.
You require those individuals or entities privy to the trade secret, whether employees or third parties such as consultants or vendors, to sign confidentiality and/or nondisclosure agreements.
You restrict access to your trade secret(s) by lock and key, badge, or another security measure.
If the information comprising the trade secret resides on a computer, access to the data must be restricted by password, PIN, secondary identification, or another security measure, or the information must be encrypted.
Employees must be trained on protecting the trade secret or secrets.
You conduct exit interviews of departing employees to advise/warn them of their obligations to maintain the confidentiality of the company’s trade secret and proprietary information.
The MUTSA lists the illegal ways by which a trade secret may be compromised. It defines “improper means” to include “bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.”
“Misappropriation” under the law involves the acquisition of a trade secret with the knowledge that the trade secret was acquired by improper means, whether it was acquired proactively or by accident or mistake. In other words, if a third party, such as a former employee or consultant, reveals a trade secret to you, you can be guilty of misappropriation if you use that trade secret to your benefit.
If your trade secret has been stolen or misappropriated to someone else’s benefit, you can have a case for injunctive relief and payment of compensation for economic damages. However, you must be able to prove that:
The information has economic value to the owner and others.
The information being protected is not generally known or readily ascertainable: The court will look at the sources of information available to the industry or trade under question and determine how difficult it would be to arrive at the same trade secret formulation.
You took reasonable steps to protect your trade secret.
Your trade secret was in fact stolen or misappropriated.
If you are operating your business with what you consider to be a trade secret, consult with me to make sure that it qualifies as such and that you are taking the appropriate steps to protect it. If theft or misappropriation happens after you’ve taken the proper steps, I will help you seek relief in court and fight for your rights as owner of the trade secret. The Law Office of Julie Scott LLC proudly serves clients in Kansas City, Columbia, Springfield, and Rolla, Missouri.