Protecting Trade Secrets under New York Law: NY Trade Secret Law Basics

Protecting Trade Secrets, in many cases, may be the difference between success and failure of your business in New York. The post shall detail the basics of New York Trade Secret Law. The New York Court System has not adopted the Uniform Trade Secrets Act (“UTSA”), but has common law principles incorporating much of the protections afforded via the UTSA.

This post deals handles the meat of the NY York Trade Secret Law, however, pragmatic business solutions to protecting your confidential business info pre-violation exist. These trade secret protection measures your NY business may tailor to its specific needs and industry. Another article that may be useful for your business in New York may be found at: Protecting your Intellectual Property in New York: NY IP Law Basics.

New York Law on the Protection of Trade Secrets

New York civil law creates civil liability for misappropriation of trade secrets, while New York’s larceny law may punish the theft of trade secrets criminally. Additional, U.S. Federal Law, under the U.S. Economic Espionage Act and related acts, may, additionally, criminally punish one that misappropriates trade secrets.

Definition of a Trade Secret in New York

The first in determining if you have an case is to determine if your information is a trade secret under the laws of New York. New York courts have utilized a broad definition of a trade secret that, in part, is adopted from § 757 of the Restatement of Torts:

“A trade secret may consist of 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. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.”
Restatement of Torts § 757

New York courts shall look, in most cases, to six factors to determine if information held by a business is a trade secret. The six factors, typically, considered by New York courts are:

the value of the information to the business and to the competitor;
the extent the information is known outside your business;
the extent to which the information is known by those within your business;
the extent of the measures taken by your business to assist in guaranteeing the secrecy of the information;
the amount of effort or money expended by you in developing the information; and
the ease or difficulty with which the information could be properly acquired or duplicated by others.

New York, in many recent cases, has taken an expansive definition of a trade secret if the owner of the trade secret made efforts to protect the trade secret, the trade secret’s dissemination is harmful to the owner, the trade secret was not widely known and the owner took great effort to obtain the information.

Additionally, after determining if a trade secret exists, New York courts shall look to see if your trade secret was violated. Most New York courts shall utilize the following test in determining if your trade secret was misappropriated. Under New York law, one is liable for misappropriation of a trade secret when one discloses or uses a trade secret without the authorization of the owner of the trade secret. To establish a prima facie case of trade secret misappropriation the owner of the trade secret must establish that:

the accused discovered the secret by improper means;
the accused disclosure or use constitutes a breach of the confidence given to the person by the other in disclosing the secret;
the accused learned the secret from a third person with notice of the facts that it was a secret that the third person discovered it by improper means or that the third person’s disclosure of it was otherwise a breach of his duty to the other; and
the accused learned the secret with notice of the facts that it was a secret and that its disclosure was made by mistake.

Civil Lawsuits for Trade Secret Violations under NY Trade Secret Law

You shall need to file a case to court within three years from the date you discovered the misappropriation or the statute of limitation shall run. In most cases, you shall need to hire an attorney to assist you in filing a lawsuit.

Criminal Complaints for Violation of NY & Federal Trade Secret Laws

You many, also, consider filing a criminal charge if, among other things, the violation is so flagrant or the theft had substantial damage to your business. We consider criminal charges, often, as a necessary means of protecting your business now and into the future.

All proactive companies doing business in New York, typically, have a two-prong approach to protecting trade secrets in New York. No. 1: Use Proactive Measures to Keep your Trade Secrets Private; and No. 2: If violations occur, aggressively enforce your rights under New York and Federal Law.

If you want to know more about How to Protect Trade Secrets in New York please schedule a no-cost initial consultation with at lawyer via clicking: Schedule a Call with a New York Lawyer.