Protecting Your Business Part III: Trade Secrets

The Virginia Uniform Trade Secrets Act, Va. Code Ann. §§ 59.1-336 through 59.1-343 (the “VUTSA”) provides a statutory framework concerning trade secrets. The VUTSA defines a “trade secret” as follows:

“Trade secret” means information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process that:

  1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
  1. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Va. Code Ann. § 59.1-336. Although formulas, patterns, compilations, programs, devices, methods, techniques, and processes are identified as information that may constitute trade secrets, this list is not exhaustive and other materials and information may qualify for trade secret protection.

Thus, in order to qualify for trade secret protection, a company must first demonstrate that the information for which the company seeks trade secret protection “[d]erives independent economic value . . . from not being generally known.” Courts have interpreted the “not generally known” requirement to mean that the information is not generally known by “other members of the relevant industry—the persons who can gain economic benefit from the secret.” MicroStrategy, Inc. v. Business Objects, S.A., 331 F. Supp. 2d 396, 416 (E.D. Va. 2004).

Second, the party seeking to protect information as a trade secret must demonstrate secrecy. The Virginia Supreme Court has explained that “secrecy need not be absolute; the owner of a trade secret may, without losing protection, disclose it to a licensee, an employer, or a stranger, if the disclosure is made in confidence, express or implied.” Dionne v. Southeast Foam Converting & Packaging, Inc., 240 Va. 297, 302 (1990). Reasonable efforts to maintain the secrecy of trade secret information include “[r]estricting access to information, implementing confidentiality agreements, and providing physical barriers to access.” Microstrategy, 331 F. Supp. 2d at 416.

Various types of information may be protected trade secrets if the foregoing is established by the party seeking trade secret protection for the information. For example, courts have determined that customer lists, pricing information, marketing and sale techniques, product information, software components, manufacturing processes, and certain compilations of information constitute trade secrets.

If information qualifies as a trade secret under the VUTSA and applicable case law, the owner of a trade secret may seek damages or injunctive relief if a trade secret has been misappropriated.

If you believe your trade secrets have been revealed, or just want advice on the matter, Contact Keithley Law, PLLC today by calling (703) 454-5147 and schedule an initial consultation in our Fairfax law office with one of our Virginia attorneys. We can walk you through the steps to get the most out of your case.