1. At common law, most courts remedied trade secret
misappropriation under the doctrine of the implied duty of good faith in regard to
2. Common law trade secret jurisprudence specifically required that a
trade secret possess actual and current economic value in order to receive judicial
3. Prior to the promulgation of the Uniform Trade Secrets Act (UTSA),
trade secret law was a subject of both state and federal common law.
4. The UTSAs definition of trade secret broadened
the scope of common law trade secret protections by covering those secrets which may
possess only potential value to the holder.
5. The Economic Espionage Act (EEA) applies to misappropriation of
trade secrets by both governmental and private entities.
6. EEA liability for private entities requries a showing that the
misappropriator of a trade secret intended to injure the trade secret holder, or knew that
injury to the trade secret holder would occur because of the misappropriation.
7. Individuals found liable under the EEA may be subject to
imprisonment of not more than 15 years.
8. The EEA requires that when passing sentence on a proven EEA
violation, the sentencing court shall also order forfeiture to the United States of any
property constituting or derived from proceeds obtained as a result of the violation.
9. The EEA protects trade secrets from misappropriation even if the
owner has not taken any steps to keep the trade secret confidential.
10. Under the EEA, trade secret protection is limited to scientific
and technical information.
11. The EEA creates a private right of action for civil litigants
involved in trade secret misappropriation actions.
12. Potential criminal liability under the EEA is specifically
limited to trade secret misappropriation occurring in the context of dealings between
commercial customers and suppliers.
13. Liability for trade secret misappropriation, if proven under the
EEA, would likely mean the existence of civil liability for trade secret misappropriation.
14. The EEA, although a relatively new federal statute, has been
15. To mitigate potential EEA liability, a company should advise new
employees at the inception of their employment of the EEAs provisions and the
employees duty to abide by such provisions.
16. Independent contractors to a company may indemnify the company
from EEA criminal liability.
17. The EEA creates a rebuttable presumption that a companys
trade secrets are protected by the statute, meaning that a company need not bother with
taking steps to specifically identify trade secret materials as proprietary and
18. Only companies with foreign subsidiaries need be concerned about
potential criminal liability under the EEA.
19. Inadvertent receipt of confidential information does not
implicate potential liability under the EEA.
20. Companies should make the EEA a regular subject of employee
training, as well as a subject for review by the companys internal audit function.
This activity has been approved
for Minimum Continuing Legal Education credit by the State Bar of California in the amount
of 1 hour in legal ethics.
The State Bar of California
certifies that this activity conforms to the standards for approved education activities
prescribed by the rules and regulations of the State Bar of California governing minimum
continuing legal education.