Tag Archives: federal trade secret

Trade Secrets Laws and the UTSA – A 50 State and Federal Law Survey Chart (revised)

World MapEvery state but Massachusetts and New York has adopted the Uniform Trade Secrets Act (the UTSA) in one form or another – though some may quibble with whether Alabama or North Carolina actually adopted it. (The Uniform Law Commissioners say that Alabama has adopted it, while North Carolina has not; I view the results as largely the opposite.)

For several years, I had been planning to run a redline comparison of each state’s trade secrets laws against the Uniform Trade Secrets Act to see the full scope of the variation. The task was quite substantial, however, and I never quite felt that it would be worth the time.

In the past, there had been plenty of articles discussing the variations in UTSA formulations among the state laws purporting to adopt the Act, including Linda B. Samuels and Bryan K. Johnson‘s, The Uniform Trade Secrets Act: The States’ Response, 24 Creighton Law Rev. 49 (1990), and  Christopher Rebel J. Pace‘s, A Case for a Federal Trade Secrets Act, 8 Harvard Journal of Law & Technology 427 (1995), but no one had done an actual side-by-side comparison of how each state’s law compared to the UTSA.

More recently, Sid Leach wrote another terrific article summarizing the significant variations among state “uniform” trade secrets laws. Sid’s article highlighted for me the need to have – and the continuing interest of others in having – a comparison. It convinced me that it was time for such a chart.

So, I made it. It took well over a hundred hours of combined effort, starting with the yeoman’s work my firm’s then-summer intern, David Haber, and dozens of hours of my time organizing, revising, and problem-solving with David and with with my paralegal, Erika Hahn, who separately spent many hours working on the chart. The chart could not have been completed without their extraordinary contributions.

It is a state-by-state comparison (as close to a redline comparison as made sense) of every state’s trade secrets laws (and the Economic Espionage Act, as amended by the Defend Trade Secrets Act of 2016) to the 1985 version (i.e., the most recent version) of the Uniform Trade Secrets Act.

The chart is viewable here. (It was originally prepared on August 14, 2016, and has been updated; it is current as of today, February 4, 2017.)

It is intended both as a stand-alone resource and a companion to our 50 state survey chart of noncompete laws, which I first prepared almost seven years ago (in the summer of 2010), though I regularly update it to reflect the changing noncompete laws around the country. (It is also current as of today, February 4, 2017.)

In addition, for a comprehensive summary of recent trade secrets and noncompete legislative reforms and efforts at reform around the country, please see the page Changing Trade Secrets | Noncompete Laws. Be sure to check back from time to time, as I regularly update it to reflect new developments.

A Federal Trade Secret Act?

Unlike patents, trademarks, and copyright, there is no federal trade secret statute. Instead, each of the 50 states has its own laws. And, although most of states have adopted some version of the Uniform Trade Secrets Act (only Massachusetts, New Jersey, New York, North Carolina, and Texas have not, although New Jersey seems to be close, and Massachusetts is perennially considering the issue), there is not a truly cohesive body of law. Some think that adoption of a federal statute will cure that.

One step in that direction is the Economic Espionage Act of 1996 (18 U.S.C. §§ 1831-1839), which criminalizes trade secret misappropriation on a federal level. However, there is no private right of action under that statute (meaning that companies whose trade secrets have been stolen can only bring a claim under state law).

Although earlier this year, there was movement to stiffen the criminal penalties (see Economic Espionage Act Update), no provision was made for a civil action. Recently, however, Senator Herb Kohl and Christopher Coons (Kohl was responsible for the original Act and both introduced the bill to stiffen the criminal penalties) introduced introduced a bill that would give companies a private right of action under the Economic Espionage Act.

The bill would permit companies to bring a civil action if: (1) their trade secrets have been stolen (as set forth in 18 U.S.C. § 1832(a)); (2) they have taken reasonable measures to protect their trade secrets (which reasonable measures must be detailed in the complaint); and (3) they make a “sworn representation” that there is either a “substantial need for nationwide service of process” or there has been “misappropriation of trade secrets from the United States to another country.”

Should the bill be adopted as written, it is the third requirement (which is not an element of state law claims) that will severely limit the availability of a federal remedy. Specifically, absent international misappropriation or some serious deficiency in the relevant state’s service of process rules (neither of which is present in the vast majority of these cases), the statute will not apply. In short, while (in my opinion) it is a step in the right direction, there is a lot more to do before we will have a truly comprehensive federal trade secret law.

UPDATE: for additional discussion on this issue, see John Marsh‘s discussion, “Could a Federal Trade Secret Cause of Action Finally Be in the Works.”