During a period of aggressive antitrust enforcement in the mid-1970s, the then Section on Patent Law of the American Bar Association resolved that businesses relied more on trade secrets than patents to protect technology. This led the National Conference of Commissioners on Uniform State Laws to promulgate the Uniform Trade Secrets Act, which has now been adopted by forty-one states and the District of Columbia.
Although patent enforcement has enjoyed a revitalization since the creation of the Federal Circuit Court of Appeals, businesses, particularly emerging enterprises, continue to rely upon confidentiality to protect both technology and business information. Indeed, every "spin-off" that seeks to compete in the same marketplace as its parent should consider the possibility that the parent might assert trade secret misappropriation in a lawsuit that the new enterprise can ill afford, not only in legal fees and personnel resources, but in adverse publicity.
Even multi-national corporations, when hiring high-level executives, should consider the doctrine of "inevitable disclosure" of trade secrets by key personnel that has emerged in recent cases. The Economic Espionage Act of 1996 has criminalized theft of trade secrets, and decisions construing the Act have been adverse to defendants. "Hot news" misappropriation has been recognized, but limited. A new Uniform Commercial Code article has been proposed that would allow trade secret-like rights and remedies to be established by "shrink-wrap" and "point-and-click" contracts. A Massachusetts variant of the Uniform Trade Secrets Act will be reintroduced shortly in the legislature.
Russell Beck, Beck Reed Riden LLP
Michael Bunis, Choate, Hall & Stewart LLP
Trade Secrets Law Forum