Virtually any useful information can qualify as a trade secret. It need not rise to the dignity of an invention; a discovery is enough, even if it is only a relatively minor improvement on a process already known to the trade. And the law extends beyond technology to cover business information, such as customer lists, financial projections and marketing plans. The key to understanding the expansive nature of trade secret law is that it can protect any process or information that is both private and useful. That is the good news. The difficulty with defining trade secrets in the abstract is that there are so many ways to go about it.1 In large part, this is a reflection of the fact that the law of trade secrets, unlike the law of patents or copyright, is a creature of the common law rather than of statute. In trying to impose a moral solution on cases of apparent breach of confidence, judges have juggled competing policy interests while trying to draw a line of protection that would lead to the result that they believed was right.2 That is not as cynical a view as it might sound. It merely reflects the reality that the primary source of trade secret law—the opinions of judges in particular cases—is grounded on very factual situations that sometimes do not easily or accurately suggest universal principles. In other words, the development of trade secret law has been a bit chaotic, and it is possible to draw definitions and rules from individual cases that might be misleading or out of context. Having said that, we now have over one hundred years of these decisions to consider, and a consensus on the most important aspects can be identified.3 The most accepted definitions are as follows:
1. Under the Restatement of Torts, §757 (1939), “a trade secret may consist of any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving material, a pattern for a machine or other device, or a list of customers.”
2. Trade secrets are defined under the Uniform Trade Secrets Act thus: ‘Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique or process that:
a. Derives independent economic value, actual or potential, from not being generally known to, and not being easily ascertainable by proper means, by other persons who can obtain economic value from its disclosure or use; and
b. is the subject of efforts that are reasonable under circumstances to maintain its secrecy.
3. The Illinois Trade Secrets Act, 765 ILCS 1065/1 et seq. (West, 1993), provides that trade secrets are “information, including, but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that:
a. is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and
b. is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality”.
4. The New Restatement of the Law Third, Unfair Competition defines a trade secret in Section 39 as follows:
§39. Definition of Trade Secret: A trade secret is any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.
In addition, it is well established that “a trade secret can exist in a combination of characteristics and components, each process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret.” Also, “a trade secret need not be essentially new, novel, or unique; .... The idea need not be complicated; it may be intrinsically simple and nevertheless qualify as a secret, unless it is common knowledge and, therefore, within the public domain.”
Outside the fuzzy line delineating protectable trade secrets are the three primary categories of unprotectable information: that which is generally known, i.e., not a secret at all; that which is readily ascertainable from proper sources; and that which constitutes an individual’s personal or professional skills. The trade secret area is divided into two parts; business information is the larger part because for most industries it represents the larger volume of protectable data. Finally, within technical information, there is a subset of knowledge that can qualify for protection under the patent laws. This area is not drawn to scale, and should be much smaller than the constraints that readable fonts has have allowed. Moreover, even within that area, one should also consider that only a fraction represents issued patents, since many owners of patentable inventions either neglect or choose not to seek patent protection. That said, patent option is a very important one. A major limitation of trade secret law is that unlike that of patents, it does not protect against independent discovery; in fact, it is possible to find oneself restrained from using one’s own secret method or machine that someone else took the trouble to patent.
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