appeals with emphasis in trade secrets and child abuse law.
15 West South Temple, Suite 1700
Salt Lake City, Utah 84101
801.524.1000 Phone
801.524.1098 Fax
tdb@princeyeates.com
www.princeyeates.com
15 West South Temple, Suite 1700
Salt Lake City, Utah 84101
801.524.1000 Phone
801.524.1098 Fax
jbb@princeyeates.com
www.princeyeates.com
financial transactions and business formation.
treasures deep inside the castle walls,
so too must lawyers help clients protect
their trade secrets. If not vigilant, clients
may lose the ability to protect the heart
of their operations because of a quirky
statute of limitations issue.
a competitive economic advantage. Most
states
"trade secret" as information used in a
trade or business, including a formula,
pattern, compilation, program, device,
method, technique, or process, that: (a)
derives independent economic value, ac-
tual or potential, from not being generally
known to, and not being readily ascertain-
able by proper means by, other persons
who can obtain economic value from its
disclosure or use; and (b) is the subject
circumstances to maintain its secrecy.
Trade secrets are at risk when em-
ployees leave unhappy or are lured away
by a competitor. Suppose a manager for
your client is offended or just ambi-
tious and decides to start a competing
enterprise. Before leaving, however, he
downloads hundreds of pages of confi-
dential information. Soon he's competing
and blatantly using the trade secrets,
which took years and oodles of money to
develop and perfect. But then the former
employee suddenly shuts down the new
enterprise. The old boss breathes a sigh
of relief, grateful for not having to hire a
lawyer to stop the misappropriation and
then does nothing more about it.
No harm, no foul. Right?
Not necessarily. This is especially
true if the ex-employee waits three years
and a day
his trade secrets could cause the old
employer to lose the ability to protect his
trade secrets.
How trade secrets are characterized
affects how quickly the owner must act to
safeguard his trade secrets. Courts have
applied two theories. One says a trade
secret is "property," having intrinsic
value that can be damaged. Each misap-
propriation under the "property" theory
gives rise to a new claim and, thus, a new
limitations period. See Microbiological
Research Corp. v. Muna, 625 P.2d 690,
696 (Utah 1981).
The competing theory says trade
secrets are not property, have no intrin-
sic value, and their value arises from
confidential relationships. Trade secrets
are protected only if the owner vigilantly
enforces the sanctity of the confiden-
tial relationship. Once the confidential
relationship is breached, the owner of
the trade secrets must act because he
now knows the misappropriator cannot
be trusted. Unless he acts to enforce and
protect that confidential relationship, the
owner risks losing control of his stolen
trade secrets forever.
The UTSA advocates the "confiden-
tial relationship" theory. The influence of
the property theory appears to be fading
in favor of the confidential relationship
theory. As states adopt the UTSA, courts
that historically applied the property
theory could begin to consider the issues