As a panelist at Practising Law Institute back in September, one of the topics I was asked to discuss involved some of the challenges inherent in proving trade secret theft claims - both nationally, and particularly under New York law. In this particular video clip (see below), I was laying out some of the more difficult, and challenging, parts of prosecuting a claim against a former employee that is predicated on their misappropriation of a trade secret.
Cooper_4 from Ken Forbes on Vimeo.
In particular, the hurdles that the courts have put up to establishing that the former employer's intellectual property and/or confidential information qualifies as a legitimate trade secret worthy of judicial protection are both numerous and daunting. In broad terms, "trade secrets" are usually defined as “any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it."
But what does that mean practically?
What a Former Employer Needs to Establish in Order to Prosecute a Trade Secret Claim
In virtually every jurisdiction, the plaintiff/former employer will need to prove at least several of the following criteria, as laid out in the Restatement of Torts § 757, comment b:
(1) the extent to which the information is known outside of [the] business;
(2) the extent to which it is known by employees and others involved in [the] business;
(3) the extent of measures taken by [the business] to guard the secrecy of the information;
(4) the value of the information to [the business] and [its] competitors;
(5) the amount of effort or money expended by [the business] in developing the information; and,
(6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
Applying the foregoing factors, New York's Court of Appeals further stated as follows in the seminal case of Ashland Management Inc. v. Janien, 82 N.Y.2d 395 (1993):
"As these considerations demonstrate, a trade secret must first of all be secret: whether it is generally a question of fact (see, Kaumagraph Co. v. Stampagraph Co., 235 N.Y. 1, 8–9, 138 N.E. 485; Union Kol–Flo Corp. v. Basil, 64 A.D.2d 861, 862, 407 N.Y.S.2d 359; Chevron U.S.A. v. Roxen Servs., 813 F.2d 26, 29 [2d Cir.]; 1 Milgrim, Trade Secrets § 2.03, at 2–32, 2–48—2–49 [1993] )."
