Pennsylvania Adopts Uniform Trade Secrets Act
Pennsylvania recently became the 45th state to adopt a version of the Uniform Trade Secrets Act (UTSA). 12 Pa. C.S. §§ 5301-5308 (2004). Originally drafted over 25 years ago, the UTSA provides a consistent approach to the protection of various types of confidential business information.
Under the Act, a plaintiff may seek injunctive relief and monetary damages for the misappropriation of a trade secret, including punitive damages for willful and malicious conduct. A prevailing party also may be entitled to attorneys’ fees and costs. The UTSA took effect in Pennsylvania on April 19, 2004.
Any “information” that meets two requirements may qualify as a trade secret under the Act. First, the information must derive independent economic value from not being readily known or ascertainable. Second, a party claiming trade secret protection must have taken adequate steps to keep the information secret. While the definition of trade secrets under the UTSA includes things such as formulas (such as the recipe for Coca Cola®) and drawings, it also includes compilations, including customer lists, as long as the two requirements are satisfied. This clears up a murky issue in common law.
Only five states do not follow any version of the UTSA. The legislatures of New York and Massachusetts are considering versions of the UTSA, while New Jersey, Texas and Wyoming have rejected it.
Despite the new-found consistency trade secret plaintiffs will find in Pennsylvania, it remains to be seen whether they will still face a rather difficult battle against a defendant claiming independent development as a defense.
In February 2003, the Third Circuit held in Moore v. Kulicke & Soffa Indus., Inc., 318 F.3d 561 (3d. Cir. 2003), that under Pennsylvania law, a defendant does not bear the burden of persuasion when claiming the defense of independent development. Rather, the burden remains with the plaintiff to show that the defendant did not derive the information through its own independent development, essentially requiring the plaintiff to prove a negative.
Continued Employment in Ohio Is Consideration for Non-Compete Agreement
On March 10, 2004, the Ohio Supreme Court held that an employee who signs a non-compete agreement after the inception of employment is subject to enforcement of that agreement even if the employee received no new consideration for signing it. Lake Land Emp. Group of Akron, LLC v. Columber, 101 Ohio St. 3d 242 (Ohio 2004).
The continuation of employment provides consideration sufficient to make the agreement legally binding. According to the court, the “presentation of a noncompetition agreement by an employer to an at-will employee is, in effect, a proposal to renegotiate the terms of the parties’ at-will employment.” When the employee assents to it by signing the agreement, “consideration supporting the noncompetition agreement exists.”
Stephen G. Harvey and Frederick Alcaro
