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Trade Secret FAQ

  1. What is a trade secret?
  2. How is a trade secret protected?
  3. What are some methods of targeting or acquiring trade secrets?
  4. Does the Economic Espionage Act of 1996 apply if the offender is a foreign person?
  5. Does the Economic Espionage Act of 1996 apply if it occurs outside the United States?
  6. Are there other statutes that can apply if trade secrets are not classified and therefore cannot be prosecuted under the Economic Espionage Act of 1996 Title 18 U.S.C. Section 1831 and 1832?
  7. When should I protect my idea with a trade secret?

What is a trade secret?
A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers. A trade secret is defined by the particular state in which it is being prosecuted. In most states the elements of a trade secret are: (1) is not generally known to the public; (2) confers some sort of economic benefit on its holder (where this benefit must derive specifically from its not being generally known, not just from the value of the information itself); and (3) is the subject of reasonable efforts to maintain its secrecy.

How is a trade secret protected?
A trade secret is protected through the use of contracts, primarily non-compete and non-disclosure agreements. Consequently, it is advised that for any work for hire by an employee or independent contractor that you have confidentiality/non-disclosure agreement and non-compete agreements in place.

What are some methods of targeting or acquiring trade secrets?
1. Steal, conceal, or carry away by fraud, artifice, or deception;
2. Copy, duplicate, sketch, draw, photograph, download, upload, alter, destroy, photocopy, replicate, transmit, deliver, send, mail, communicate, or convey; and,
3. Receive, buy, or possess a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization.

Does the Economic Espionage Act of 1996 apply if the offender is a foreign person?
Yes. The Act states that (1) whoever knowingly performs targeting or acquisition of trade secrets to (2) knowingly benefit any one other than the owner. Other elements will apply for prosecution.

Does the Economic Espionage Act of 1996 apply if it occurs outside the United States?
Yes. However, the violator must be (1) a US person or organization; or (2) an act in furtherance of the offense was committed in the United States.

Are there other statutes that can apply if trade secrets are not classified and therefore cannot be prosecuted under the Economic Espionage Act of 1996 Title 18 U.S.C. Section 1831 and 1832?
Yes. The following is a list of violations that may apply: Mail Fraud, Wire Fraud, Interstate Transportation of Stolen property, Export Control, and Intellectual Property Rights. Contact your local FBI for further assistance.

When should I protect my idea with a trade secret?
Typically, one would only use a trade secret instead of other intellectual property protection (e.g., patent, trademark or copyright) if there is no possibility that your idea could be discovered or reverse engineered. For further information, please send us an email at bambi@bfwpc.com or call us toll free at 1-888-388-9614.

Last Modified: December 13th, 2009