How does New York define a “trade secret”?

New York City is perhaps the largest financial, entertainment and high tech center in the United States, and businesses engaged in these industries rely heavily of the concept of “trade secret” to protect their intellectual property from expropriation by other firms. Ironically, New York and Massachusetts, are the only two states that have not adopted the Uniform Trade Secrets Act. Instead, New York courts use a common law definition that is the product of many years of trade secret litigation.

In New York, the information must be in continuous use to qualify as a trade secret. In general, a trade secret in New York defines a trade secret as “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.”

New York have devised a more detailed six-factor test to determine if the information at stake constitutes a trade secret.

• The extent to which the information is known outside of the business that claims ownership
• The extent to which it is known by employees and others involved in that business
• The extent of measures taken by the business to guard the secrecy of the information
• The value of the information to the business and its competitors
• The amount of effort or money spent by the business in developing or discovering the information
• The ease or difficulty with which the information could be acquired or duplicated by others

None of the factors is dispositive, and none is indispensable.

As may easily be surmised, the application of either the broad definition or the six-factor test can be uncertain and difficult. Any firm that wishes to protect its intellectual property may wish to consult an experienced business lawyer for a review of the information at issue. A knowledgeable attorney can provide a helpful analysis of the law and facts that will determine whether the information is a trade secret.

Source: American Bar Association Commercial and Business Litigation, “Three Key Distinctions Between the Uniform Trade Secrets Act and the Common Law,” Gregory S. Bombard, Jan. 26, 2016, accessed on Mar. 13, 2017