Obviously enough, the first element of trade secret misappropriation is the existence of a trade secret. A trade secret is any information (including a formula, pattern, compilation, program, device, method, technique, or process) that derives actual or potential economic value from not being generally known to or readily ascertainable by other persons who could obtain economic value from its disclosure or use. Uniform Trade Secrets Act ? 1(4)(i); see also Metallurgical Industries Inc. v. Fourtek, Inc., 790 F.2d 1195 (5th Cir. 1986).
Reasonable Precautions to Prevent Disclosure
The second element that must be established by the plaintiff in a trade secret case is that the holder of the trade secret took reasonable precautions under the circumstances to prevent its disclosure. No one may let information about products and operations flow freely to competitors and then later claim that the competitors acquired the information wrongly. To establish the right to sue later, one must be consistently diligent in protecting information. This can be done in various ways, such as with non-disclosure agreements, non-compete agreements, and physical security measures. However, the presence of the term "reasonable" ensures close cases and difficult line-drawing for courts. Uniform Trade Secrets Act ? 1(4)(ii); see also Rockwell Graphic Systems, Inc. v. DEV Industries, Inc., 925 F.2d 174 (7th Cir. 1991).
Finally, a trade secret plaintiff must also prove that the defendant wrongfully acquired, or misappropriated, the trade secret. Just because a person's information is valuable does not make it wrong for others to use or disclose it. Acquisition or use of a trade secret is illegal only in two basic situations: where it was done through improper means, or where it involves a breach of confidence. Uniform Trade Secrets Act ? 1; Restatement (3d) of Unfair Competition ? 40; see also E. I. DuPont deNemours & Co. v. Rolfe Christopher et al., 431 F.2d 1012 (5th Cir. 1970) (improper means); Smith v. Dravo Corp., 203 F.3d 369 (7th Cir. 1953) (confidential relationship); Kadant, Inc. v. Seeley Machine, Inc., 244 F. Supp. 2d 19 (N.D.N.Y. 2003) (reverse engineering).
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