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Trade secret protections in Wisconsin and Illinois

by | Mar 12, 2021 | Business Law

Many companies have trade secrets that are extremely valuable to their business. Trade secrets typically are viewed as a company’s “top secret” information and could be its most valuable asset. A well-known example of this is Coca-Cola, which relies on their secret recipe every day to create their popular and well-loved soda. This secret recipe has been a key component to their success. Federal and state laws provide various protections for trade secrets.

Trade secret protections help businesses keep secret information confidentialWhat is a trade secret?

A trade secret is information that has potential or real economic value to the owners of the secret. The trade secret would also create value for others if they knew the secret. Lastly, there must be an effort to maintain this secret. These three factors must exist for there to be a legitimate trade secret.

Trade secrets differ from patents, as patents have a time limit attached to them. Patents also are filed, and many details have to be clearly laid out, which is then available for the public to see. Once that time limit is up, there is no protections from someone using your idea. Although patents are a great legal resource, classifying something as a trade secret can continually protect your confidential and important business information.

Notable laws involving trade secret protection

There have been steps taken by the government at the federal and state levels to protect trade secrets. Three notable laws include the Uniform Trade Secrets Act, Economic Espionage Act, and the Defend Trade Secrets Act. These three laws allow legal resources for companies to continue to protect what makes them so profitable.  Below are brief overviews of each law.

Uniform Trade Secrets Act (UTSA)

The Uniform Trade Secrets Act (UTSA) is a uniform law that has been adopted by 48 states in the United States, including both Wisconsin and Illinois. The two states that have not adopted this law are New York and North Carolina. Wisconsin’s Uniform Trade Secrets Act was adopted in 1985. Illinois has adopted a version of the UTSA, which they refer to as the Illinois Trade Secrets Act (ITSA) in 2010. The ITSA is similar to the UTSA, but has expanded upon a few basics of the law, including what is defined as a trade secret.

The UTSA involves a level of secrecy that needs to be kept for the trade secret to be protected. The trade secret must not be general knowledge, which means the public should not be aware of the contents of the trade secret. General knowledge cannot be claimed as a trade secret because it does not meet the level of secrecy warranted. The secret must also be difficult to uncover without improper means. This trade secret often must give its owner a competitive advantage, which creates value for that company.

Economic Espionage Act of 1996 (EEA)

The Economic Espionage Act of 1996 established that the theft of a trade secret is a federal crime. This law is especially harsh on those that try to steal a trade secret when that secret would benefit a foreign entity.

Defend Trade Secrets Act of 2016

Lastly, the Defend Trade Secrets Act of 2016 (DTSA) amended the Economic Espionage Act. It allowed private parties to bring civil action in federal courts if the trade secret relates to a product or service used in interstate or international commerce. This act also allowed for the seizure of property to prevent dissemination of your trade secret. The DTSA also protects whistleblowers with established whistleblower immunity.

This act does not replace the UTSA. If you are bringing forth a claim of misappropriation of your trade secret, you can choose whichever venue to file your claim.

What steps can I take to protect my trade secrets?

First, the company should implement strict measures to protect the trade secrets, This may mean keeping the secrets under lock and key, password protecting secret files, and similar protective measures.

Second, the company should protect their secrets by written agreement. This may take the form of an employment contract with key employees who have access to the secret. It also may take the form of a non-disclosure agreement (NDA), agreement protecting confidential information, or non-compete agreement. These three agreements often are combined into an employment agreement for a key employee and certainly help keep trade secrets safe. These protective measures must be reasonable and taken within a reasonable time.

Third, the company must take reasonable actions to continue the protections. For example, if the company becomes aware that a former employee is unlawfully disclosing its trade secret, the company should immediately take action to stop the former employee from unlawfully disclosing that information. A cease-and-desist letter and, in some cases, immediate injunctive relief may be required.

How McDonald & Kloth, LLC can help you with your trade secret protections

McDonald & Kloth, LLC can help you protect your trade secrets. Our attorneys have experience in drafting non-disclosure, confidentiality, and non-compete agreements. We also can help you protect your trade secrets through litigation if you believe your trade secret has been stolen or otherwise unlawfully disclosed. We know how important trade secrets are to a business and will prioritize your needs. Give us a call today at 262-252-9122 to schedule a legal consultation.