At the international level, trade secrets are protected under the auspices of the World Trade Organization (WTO). In particular, the signatories and members of the WTO signed a treaty called the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) which went into effect in January 1995. The TRIPS Agreement obligated the various member nations to enact national laws to protect trade secrets at least to the level required by the TRIPS Agreement. The TRIPS Agreement also prevented governments from disclosing trade secrets related to pharmaceutical and agricultural chemical products where companies are required to disclose those trade secrets to obtain regulatory approval. See general information about the TRIPS Agreement here.
The protections provided for trade secrets by the TRIPS Agreement are similar to the protections provided here in the US at the federal and state levels. A comparison provides some useful legal context for trade secret lawyers tasked with protecting their clients and prosecuting trade secret misappropriations. The operative provision of the TRIPS Agreement is Article 39 which, in part, states as follows:
Section 2. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices so long as such information:
(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
(b) has commercial value because it is secret; and
(c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.
For comparison, the Michigan Uniform Trade Secrets Act (“MUTSA”) prohibits unlawful use or disclosure of trade secrets with such being being defined as:
(d) “Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following:
(i) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
In comparing the MUTSA and the TRIPS Agreement, several important differences are apparent. First, under the MUTSA, trade secrets are very broadly defined. This is generally true under federal law and in every jurisdiction in the US. By contrast, the definition used under the TRIPS Agreement is much more narrow, clearly focusing on manufacturing processes rather than a wider category of commercial information and data like customer lists, vendor sources, price lists and the like. Further, unlike the TRIPS Agreement, the MUTSA recognizes and excludes from the definition of trade secrets information that can be “readily ascertain[ed] by proper means.” This allows for the common practice of reverse engineering which is not something that should be punished or chilled if free markets are to be encouraged. Another distinction is the recognition in the TRIPS Agreement that trade secrets protection extends to information that might be “lawfully within” the control of a person or business. This acknowledges that trade secrets should be protected even where the information in question might be owned by one entity but legally possessed by another. This distinction is not explicitly recognized in the various trade secret statutes in the US. However, US courts have honored that distinction as in, for example, the case of Advanced Fluid Systems, Inc. v. Huber, Case Nos. 19-1722 and 19-1752 (3rd Cir. April 30, 2020) recently discussed here on this blog.
For more information and/or if you have questions about protecting your trade secrets or if you need to initiate trade secret litigation, contact the trade secret lawyers at Revision Legal at 231-714-0100.