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The contract in the trade secret ballroom - a forgotten dance partner?

16 Tex. Intell. Prop. L.J. 47 (Fall 2007) Tracey, Alan J. About: Mr. Alan Tracey received dual B.S. degrees in Production Operations and Procurement from Bowling Green State University. Mr. Tracey received his J.D. from The Ohio State University School of Law in 1994 and has been practicing law in the state of California since 1994. Abstract: Trade secret business information is a valuable commodity. Companies that fail to protect it and the intellectual capital that it represents quickly lose ground to the competition. One of the most versatile and commonly used documents to protect that information is a nondisclosure agreement or clause covering confidentiality obligations in an employment or business contract. These agreements seek to bar trade secret information from being disclosed, but more than that, these agreements are used as an important?and sometimes the sole?factor a court considers when evaluating whether the information at issue qualifies as trade secret information. They are therefore protected by the laws governing trade secrets or exist as another kind of information that is not protected by such laws. This article first provides an overview of the evolution of trade secret law. It then follows with a summary of the view taken by many courts that the use of a nondisclosure agreement to protect information meets the requirement under the Uniform Trade Secrets Act (UTSA) that an owner of information must make efforts that are reasonable under the circumstances to maintain its secrecy, even when little or no other efforts are made. This article further explores the common reasons that plaintiffs in trade secret disputes often ignore the nondisclosure agreement that initially served to establish the information, as a trade secret case will yield more liberal remedies than a breach of contract case brought under the nondisclosure agreement. In such cases it is common that courts may loosely apply contract interpretation principles, and contractual provisions which limit a contracting party?s liability may be ignored. Finally, this article suggests that the practitioner must account for these unusual risks when drafting agreements that apply to the exchange of trade secret information.

Full post as published by The Trade Secrets Vault on January 24, 2008 (boomark / email).