Protecting business information in New Jersey

| Dec 29, 2020 | Intellectual Property Litigation |

Most New Jersey businesses take far-reaching measures to protect their confidential information. Many businesses ask employees to sign confidentiality agreements as a condition of their employment. Many businesses also rely on the New Jersey Trade Secrets Act to prevent others from misappropriating their confidential information. If properly deployed, these two methods can be very effective in keeping unauthorized parties from gaining access to business secrets, but the differences between the two methods is not often clearly understood.

Using confidentiality agreements

A common method of protecting business information is the use of confidentiality (or non-disclosure) agreements. Non-disclosure agreements are essentially contracts that restrict one of the parties to the agreement from obtaining or disclosing confidential information obtained from the other party to the agreement. These agreements usually define the confidential information that is subject to the document’s protections. An advantage of using an NDA is flexibility; the party seeking protection of its secret information can define that information in any manner that it chooses.

The New Jersey Trade Secrets Act

In 2011, the New Jersey adopted the Uniform Trade Secrets Act; since the original adoption, the legislature has made several changes to the statute, but none of the changes affect the basic scope of the law. The law forbids the misappropriation of a trade secret. Misappropriation is defined as the obtaining or acquiring of information that is known as secret by means that are inappropriate.

The most important part of the statute is its broad definition of “trade secret.” A trade secret is information held by one or more individuals without regard to the form of the information. The information can be a “formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process. . . .” The definition rests on two important conditions:

  • The information derives economic value from not being generally known; and
  • Is the subject of reasonable efforts to maintain its secrecy.

Failure to satisfy either of these conditions might jeopardize the secret status of the information.

Any business owner who is concerned about preserving the secrecy of the company’s confidential information may wish to consult an experienced intellectual property attorney for advice on the various conditions that must be satisfied in order to maintain the secrecy designation of the business’ confidential information.

 

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