Trade Secret or Confidential Information?

In most states, trade secrets and confidential information (among certain other things) are legitimate business interests that may be protected through a noncompetition agreement (as well as through other restrictive covenants).  But, in Massachusetts, are they different things and does the difference matter?  The short answer:  Yes and no.  (That’s not intended to be read as the lawyer’s typical noncommittal response, “It depends”; rather, it’s “yes” to the first, and “no” to the second.)

The longer answer is as follows (if you’re not a lawyer, ignore the case names and cites – those are for the Massachusetts lawyers reading this):

Although there is substantial overlap between trade secrets and confidential information, they are in fact different things. See, e.g., Warner-Lambert Co. v. Execuquest Corp., 427 Mass. 46, 48–49 (1998) (confidential information protectable even when it does not qualify as a trade secret); Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 839–40 (1972) (“confidential information is not limited to technical trade secrets”); Dynamics Research Corp. v. Analytic Scis. Corp., 9 Mass. App. Ct. 254, 273 n.23 (1980); Kroeger v. Stop & Shop Cos., 13 Mass. App. Ct. 310, 316 (1982) (even in the absence of trade secrets, restriction was necessary to protect confidential information); Mitchell John Coiffures, Inc. v. Jordan & Co., 2000-01272 (“Massachusetts law also protects an employer’s confidential and proprietary business information even if such information does not enjoy the status of a trade secret.”). Specifically, trade secrets are a subset of confidential information. See generally Jet Spray Cooler, Inc. v. Crampton, 361 Mass. at 839–40; Dynamics Research Corp. v. Analytic Scis. Corp., 9 Mass. App. Ct. at 273 n.23 (“Not every commercial secret . . . qualifies as a trade secret. It is well known that in business most matters are considered as confidential; however, only secrets affording a demonstrable competitive advantage may be properly considered as trade secrets.” (citations omitted)); Hurwitz Group, Inc. v. Ptak, 2002 WL 32717868, at *2 (Mass. Super. Ct. June 27, 2002) (Billings, J.) (referencing trade secrets and “other confidential information” (emphasis added)). Nevertheless, “[t]here is no meaningful distinction between ‘trade secrets’ and ‘confidential information.’” IME, Inc. v. Quaranto, 1991 WL 11007754, at *8 (Mass. Super. Ct. Feb. 7, 1991) (Barrett, J.) (citing Chomerics, Inc. v. Ehrreich, 12 Mass. App. Ct. 1, 10 n.17 (1981) and Jet Spray Cooler, Inc. v. Crampton, 377 Mass. 159, 165 (1979)); see also Take it Away, Inc. v. Home Depot, Inc., 2009 WL 458552, at *8 (D. Mass. Feb. 6, 2009) (Woodlock, J.) (“Massachusetts case law does not always define clearly whether trade secrets are synonymous with confidential information or proprietary information. Nevertheless, the case law does suggest that trade secrets and confidential information are essentially identical concepts.” (citations and internal quotations omitted)).

If you’re in a state other than Massachusetts (or New York), your state has adopted some version of the Uniform Trade Secrets Act (or at least taken important language from the UTSA). In those states, the definition of “trade secret” has a broader meaning than in Massachusetts (and New York), where the law is based on a 1939 set of rules. In short, in those states, the overlap between the two is so great that there are very few types of confidential information that are not subsumed by that definition (e.g., health-related information about a company’s employees).