Arthur R. Lehman, L.L.C.

What is a trade secret in New York?

A trade secret is a type of intellectual property that can be protected by law. In New York, a trade secret is a formula, device, pattern or other information that is compiled to use in a business that gives the business a competitive advantage over others who don't have or don't know how to use the same information. If someone attempts to appropriate a trade secret, New York intellectual property law can protect its legitimate owner.

In most of the country, trade secrets are governed by the Uniform Trade Secrets Act. But New York is one of only two states that has failed to adopt it, even in part. In New York, trade secrets are protected by a blend of state statutes as well as state and federal common law. The controlling law is laid out in the Court of Appeals' decision in Ashland Mgmt. Inc. v. Janien, in which the state's highest court laid out a balancing test that contains six factors to determine if a protected trade secret exists.

Borrowing from the Restatement of Torts, section 757, the Court of Appeals held that the factors to be examined to determine whether a trade secret exists are: the extent to which the information is generally known; the extent to which employees know the information; the measures the business has taken to protect the information; how the business - and its competitors - value the information; the amount of resources, financial and otherwise, the business expended to develop the information; and how easy it would be for others to acquire or duplicate the information.

Not all of the factors must be present for a trade secret to exist. Rather, once all the factors are weighed, they must point to the likelihood that a trade secret exists. And if they do, New York law will protect the owner of the trade secret.

Source: FindLaw.com, "Protecting Trade Secrets," accessed Mar. 26, 2018

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