Can you keep a (trade) secret?

Gavel to Gavel

published in The Journal Record | July 7, 2022

Do you know what your trade secrets are worth? If not, it’s time to find out, because those who cannot answer this question may find themselves without a basis for bringing a claim under the Defend Trade Secrets Act (DTSA).

For example, in ATS Group, LLC v. Legacy Tank and Industrial Services LLC, 407 F. Supp. 3d 1186 (W.D. Okla. 2019), the U.S. District Court for the Western District of Oklahoma considered the sufficiency of a claim brought under the DTSA. Although the plaintiff was able to identify the general contents of its allegedly stolen trade secrets and the methods it used to protect those secrets from disclosure, the court still dismissed the company’s DTSA claims.

The reason for the dismissal? The company could not articulate the reasons why the trade secrets had commercial value. According to the court, it was not enough for the corporation to allege that the information had independent value because it was not generally known; instead, the plaintiff was required to allege facts supporting the conclusion that the trade secrets had independent value or provided a competitive advantage because they were not generally known. A plaintiff who cannot allege such facts will find itself without a viable DTSA claim.

In view of ATS and other recent decisions regarding DTSA claims, those who seek to preserve the value of their trade secrets should take stock of their trade secrets, define the scope of those secrets, and take measures to either assign a commercial value to those trade secrets or articulate why those trade secrets provide a commercial advantage. Those who have this information readily available will not only be able to quickly prepare a factually supported complaint in the event their trade secrets are misappropriated, they will also be able to ensure that the efforts they are taking to protect their trade secrets are commercially reasonable in view of the economic value of those secrets.

Trade secrets can be a valuable tool in your intellectual property portfolio. But the value of your trade secrets depends largely on the actions you take before those secrets are misappropriated. To ensure your intellectual property retains its value, take steps today to inventory and value your company’s trade secrets.

This article appeared in the July 7, 2022, issue of The Journal Record. It is reproduced with permission from the publisher. © The Journal Record Publishing Co.