The trade secrets of a business can easily be one of its most valuable assets. We have wide-ranging experience litigating matters regarding trade secrets in cases involving non-compete agreements. This is a complex area of law requiring specialized legal knowledge. We take pride in developing sound legal strategies to help you navigate any issue or dispute related to trade secrets law.
Classifications of Trade Secrets in Missouri
The term “trade secrets” is sometimes used loosely to include confidential information or secrets of a business. See, e.g., Healthcare Svcs. of the Ozarks, Inc. v. Copeland, 198 S.W.3d 604 (Mo. banc 2006). However characterized, the employer must prove that the information is, among other things, actually secret and not readily duplicated by competitors without inside knowledge. Id. at 610-11. Importantly, an employer has both a statutory and common law right to protection of trade secrets, even without a covenant not to compete. Wilson Mfg. Co. v. Fusco, 258 S.W.3d 841 (Mo. Ct. App. 2008).
Courts in Missouri consider the following factors in determining whether information constitutes a trade secret:
- the extent to which the information is known outside of the business;
- the extent to which it is known by employees and others involved in the business;
- the extent of measures taken by the business to guard the secrecy of the information;
- the value of the information to the business and to its competitors;
- the amount of effort or money expended by the business in developing the information; and
- the ease or difficulty with which the information could be properly acquired or duplicated by others.
Healthcare Svcs., 198 S.W.3d at 611. The employer bears the burden to prove the existence of trade secrets. Id. Evidence of purported trade secrets must be sufficiently specific to allow a court to determine whether an item is a trade secret. Id.
Matters of public knowledge or information that is generally known within a given industry cannot be appropriated as a trade secret. Brown v. Rollet Bros. Trucking Co., Inc., 291 S.W.3d 766, 776 (Mo. Ct. App. 2009). The protection does not extend to knowledge that is the natural product of the employment or known throughout the industry. Id.
Along with most other states, Missouri has adopted a trade secrets law—the Missouri Uniform Trade Secrets Act (“MUTSA”). The MUTSA defines a trade secret as information, including but not limited to, technical or nontechnical data, a formula, pattern, compilation, program, device, method, technique, or process, that:
- 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
- is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
§ 417.453(4) RSMo. There are three principal elements of a trade secret under Missouri law, namely:
- Qualifying Information: there must be qualifying information, such as customer data, needs, contacts, product specifications, price information and material requirements, engineering drawings, product pricing information, and marketing plans;
- Value due to Secrecy: the information must have value from being a secret or confidential, such as a special formula or recipe kept appropriately secret.
- Reasonable Steps to Protect: the business must have taken reasonable steps to keep the information secret or confidential, such as precautionary measures like limiting access to the information within the business (e.g., how it is accessed and by whom it can be accessed, etc.).
Again, it is worthwhile to note that, even without a non-compete defining the precise trade secret allegedly at issue in a case and prohibiting its use or disclosure, the employer may still have a right to protection of the alleged trade secret at issue under the MUTSA.
Protecting Trade Secrets
An employer must take adequate measures to protect trade secrets to ensure they qualify as “trade secrets” under Missouri law. The following may constitute a few examples of precautionary measures to protect trade secrets:
- Have employees and contractors sign appropriate agreements, including but not limited to non-disclosure and non-compete agreements;
- Maintain a confidentiality policy as part of the employee handbook and have employees sign an acknowledgment to confirm knowledge of and adherence to the handbook;
- Utilize passwords and other safeguards for access to electronic data;
- Internally identify information as “confidential” or a “trade secret”;
- Securely store tangible trade secret information;
- Establish guidelines for the use of trade secrets when not on business premises.
Misappropriation of a Trade Secret
Once it is determined there is a trade secret, a threshold question with respect to exercising rights or remedies is whether there has been a “misappropriation.” The misappropriation can be actual or threatened.
Under the MUTSA, “misappropriation” is defined as follows:
(a) acquisition of a trade secret of a person by another person who knows or has reason to know that the trade secret was acquired by improper means; or
(b) disclosure or use of a trade secret of a person without express or implied consent by another person who:
- used improper means to acquire knowledge of the trade secret; or
- before a material change of position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake; or
- at the time of disclosure, knew or had reason to know that knowledge of the trade secret was: (a) derived from or through a person who had utilized improper means to acquire it; (b) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (c) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use.
§ 417.453(2) RSMo. Misappropriation occurs either: (1) when the trade secret is obtained through improper means, or (2) when there is disclosure or use without proper consent and the discloser or user knows or has reason to know that the trade secret was subject to a duty to maintain its secrecy or limit its use. Due to the various requirements under Missouri law, proving one misappropriated a trade secret is often a fact-intensive process.
Remedies for Misappropriation
The MUTSA provides for injunctive relief and damages if there has been a misappropriation. As to injunctive relief, the business may seek an injunction prohibiting use and disclosure of trade secrets or perhaps, if relevant, an injunction prohibiting the soliciting of customers. § 417.453 RSMo. Damages may also be sought. § 417.457 RSMo.
Contact an attorney at the Law Offices of Kevin J. Dolley at (314) 645-4100 or through email@example.com to set up a confidential consultation to discuss a trade secret matter.