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New Jersey New Trade Secrets Act Helps Protect Confidential Business Information

By: Thomas W. Hartmann
The Hartmann Law Firm
908-731-6976; Contact Attorney Thomas Hartmann

The recently enacted New Jersey Trade Secrets Act offers a solid statutory footing to protect critical business information and allows New Jersey to join 46 other states and the District of Columbia that have adopted similar legislation.

The new law clarifies the definition of "trade secret" as:

Information, held by one or more people, without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process, that:

  1. 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; and
  2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Under the old common law protections, a business had to show that the person who took the trade secret used or was about to use the secret. At least in theory, the new law defines misappropriation as the simple acquisition of the trade secret if the acquirer knows or has reason to know that the information was obtained through improper means. The business need not prove imminent harm. Business owners have three years to sue from the time they learn or should have learned of the misappropriation.

The Act authorizes the recovery of damages for misappropriation of trade secrets, including actual loss and unjust enrichment, as well as injunctive relief. A court may award attorney's fees and the costs of expert witnesses to the prevailing party if the opposing party acts willfully, maliciously or in bad faith.

The new law takes effect immediately but does not apply to misappropriation that has already occurred.

While the new statute will help clarify trade secret protection in New Jersey, business owners should continue to proactively protect their confidential business information. Such measures can include securing the information and restricting access as necessary, marking documents as confidential, putting confidentiality agreements in place with employees and third parties, and actively monitoring and investigating enforcement of information protection policies.

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Watchung, NJ 07069
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