Oregon Trade Secrets
Definition of a Trade Secret
Many states have adopted the Uniform Trade Secrets Act which protects information that (1) derives economic value from not being known to the public and (2) is the subject of reasonable efforts to maintain its secrecy. A trade secret can include a business formula, compilation, pattern, program, device, method, technique, or process which, though neither copyrighted nor patented, is used in the conduct of the owner’s business, is not disclosed to the public, and provides the owner with some competitive advantage.
The following factors will likely be considered in determining whether a trade secret exists:
- The extent to which the information is known outside the owner’s organization;
- The extent to which it is known by employees and others involved in the organization;
- The extent of measures taken by the owner to guard the secrecy of the information (e.g., labeling the information “Trade Secret” or “Confidential,” advising employees of the existence of a trade secret, limiting access to the information within the company on a “need-to-know basis,” and controlling company access);
- The economic value of the information to the owner and the owner’s competitors;
- The amount of effort or money expended by the owner in developing the information; and
- The ease or difficulty with which the information could be properly acquired or duplicated by others.
Misappropriation of a trade secret occurs when a person acquires the trade secret of another by means which the person knows or has reason to know constitutes improper means, or when a person discloses or uses the trade secret without the express or implied consent of the trade secret owner.
The Uniform Trade Secrets Act provides for injunctive relief if a trade secret is misappropriated or there is a threat that a trade secret will be misappropriated. The Uniform Trade Secrets Act also provides for awards of monetary damages, covering both actual loss and unjust enrichment caused by the misappropriation. Absent proof of actual loss or unjust enrichment, a reasonable royalty may be awarded. If the misappropriation is “willful and malicious,” the court may award exemplary damages of up to twice the above-mentioned damages, plus attorneys’ fees if a misappropriation claim is made in bad faith.
Pursuant to the Uniform Trade Secrets Act, misappropriation is not limited to the initial act of improperly acquiring trade secrets. The use and continuing use of the trade secrets is also misappropriation. It is noteworthy that the Uniform Trade Secrets Act does not require that the defendant gain any advantage from disclosure of the trade secret in order for misappropriation to occur. It is sufficient to show “use” by disclosure of the trade secret with actual or constructive knowledge that the secret was disclosed under circumstances giving rise to a duty to maintain its secrecy.
It is important for organizations to take significant steps to keep the information secret; an organizationmay not claim misappropriation of a trade secret if there was no effort taken to treat the information as secret. Some practical means by which a company can help avoid misappropriation of its secrets include reminding employees about confidential communications, asking employees to sign confidentiality agreements, and marking sensitive communications with the word “secret” or “confidential.”
One may also be criminally liable for the intentional misappropriation of a trade secret.
An action for misappropriation must be brought within three years after the misappropriation is, or reasonably should have been, discovered.
A trade secret is not protected against discovery by fair and honest means, such as independent invention, accidental disclosure, or reverse engineering.
As a general principle, the more difficult the information is to obtain and the more time and resources expended by the employer in gathering it, the more likely it is that a court will find such information to be a “trade secret” under the Uniform Trade Secrets Act.
Oregon Trade Secrets Law
Oregon adopted the Uniform Trade Secrets Act in 1986 (Or. Rev. Stat. Secs. 646.461 et seq.). As provided by the Act, the common law of trade secrets continues to exist with regard to contractual law and civil liability not premised on misappropriation. The act defines a “trade secret” as any information (including a drawing, cost data, customer list, formula, pattern, compilation, program, device, method, technique or process) that “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 is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
The Act provides that damages, injunctive relief and attorneys fess (in the case of bad faith misappropriation) may be available. The Act prohibits various acts of misappropriation, including the unauthorized use or disclosure of a trade secret, or the acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means (even if the acquisition was by accident or mistake).
In addition to injunctive relief barring disclosure of the trade secret, the court may also order that the defendant take affirmative steps to protect the trade secret, and the Court itself will endeavor to maintain the secrecy of the trade secret during court proceedings, such as reviewing materials in camera or sealing the court hearing transcripts. As provided by the Act, the common law of trade secrets continues to exist with regard to contractual law and civil liability not premised on misappropriation. Finally, an action for misappropriation must be brought within three years after the misappropriation is, or reasonably should have been, discovered.