Many businesses in New Jersey possess information that is regarded by the company’s officers as secret and as the company’s intellectual property. Protecting a company’s secret information from disclosure to competitors can be a challenging task. For many years, New Jersey businesses had only the common law of trade secrets to protect their intellectual property. In 2012, the New Jersey Legislature passed its own version of the Uniform Trade Secrets Act, calling it the New Jersey Trade Secrets Act. Thus, New Jersey businesses now have two protections for their secrets: the common law definition of trade secret and the recently passed statute. Which works better?

The problem with the common law of trade secrets is the vague definition of trade secret and the development of new methods of pilfering corporate information through use of the internet. The statute provide a clear definition of trade secret: “information, held by one or more people, without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process.” The statute imposes two important conditions on this definition:

  • The information must “derive independent economic value” from not being generally known; and
  • The information must be the object of reasonable efforts to maintain its secrecy.

No matter how valuable the information may be, it cannot be generally known in order to be considered a trade secret. Also, proof that the entity that is alleging ownership of the information has taken appropriate protective efforts must show that such efforts were taken before the alleged theft occurred.

The penalty for a violation of the Trade Secrets Act can be either a suit seeking an injunction against use of the information or seeking damages, usually measured by illicit profits.

Any business that believes that it possesses trade secrets may wish to consult an experienced intellectual property attorney for advice on identifying the information and establishing appropriate protective measures. If the company’s management believes that secret information has been stolen, the attorney can provide helpful advice on whether to seek an injunction or sue for damages, or both.

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