USA – D.C. METROPOLITAN AREA Trends and Developments Contributed by: Linda M. Jackson, Andrew Baskin, Pascal “Pat” Naples and John M. Hindley, ArentFox Schiff LLP
Trade secret law continues to evolve rapidly, including within the Washington, DC–Maryland–Virginia region (DMV). As businesses confront new competitive pres - sures, emerging technologies, and a shifting legal landscape around restrictive covenants, understand - ing and navigating trade secret protections has never been greater. This feature surveys the DMV’s key legal frameworks; examines national trends shaping trade secret litigation, including under the federal Defend Trade Secrets Act (DTSA); and offers practical strat - egies for protecting trade secrets as non-compete agreements face growing restrictions. Trade Secret Protection in Washington, DC, Maryland, and Virginia Each state within the DMV has enacted its own version of the Uniform Trade Secrets Act with several similari - ties. Fundamentally, each jurisdiction defines “trade secret” in essentially the same way: information that (i) derives independent economic value from not being generally known to, or readily ascertainable by, others who could benefit from its disclosure, and (ii) is the subject of reasonable efforts to maintain its secrecy. Moreover, each jurisdiction prohibits misappropriation by “improper means”, defined to include theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Each trade secrets statute has a three-year statute of limitations. Courts can enjoin actual or threatened misappro - priation. Additionally, in each jurisdiction, a plaintiff can recover both actual loss and unjust enrichment caused by misappropriation or, alternatively, a reason - able royalty. And if the misappropriation was wilful and malicious, a court may award exemplary damages and attorneys’ fees. The DMV’s statutory frameworks offer relative consist - ency and predictability in protecting confidential and proprietary information. Washington, DC: The District of Columbia Uniform Trade Secrets Act (DCUTSA) DCUTSA, D.C. Code § 36-401 et seq., provides the statutory framework for trade secret protection in the District. The threshold inquiry in every trade secret case is whether there is a trade secret to be misap -
propriated. “[I]nformation is not a trade secret as a matter of law if it is easily ascertainable by the public or generally known within an industry”. Econ. Rsch. Servs. Inc. v Resol. Econs., LLC , 208 F. Supp. 3d 219, 232–33 (D.D.C. 2016). To determine if something is a trade secret, DC courts have relied on the six-factor test articulated by the Restatement of Torts § 757. Courts have recognised that customer lists, pricing information, business plans, and other compilations of business information can constitute trade secrets under the statute. Importantly, a combination of public information can constitute a trade secret if the combi - nation adds value to that information. To achieve trade secret status, the plaintiff must dem - onstrate reasonable efforts to maintain secrecy, not absolute secrecy. In Meyer Group, Ltd. v Rayborn , for example, the court held that alleging that employees were required to sign confidentiality agreements was enough at this stage to plausibly allege the existence of trade secrets under both DTSA and DCUTSA. No 19-1945, 2020 WL 5763631, at *6 (D.D.C. Sept. 28, 2020). Other measures courts have credited include maintaining information on password-protected com - puter systems with restricted access, implementing employee policies on the importance of maintaining confidentiality, marking documents as confidential, keeping physical copies in locked file cabinets, and including confidentiality notices in email communica - tions. DCUTSA defines “misappropriation” to encompass two categories of wrongful conduct: (i) acquiring a trade secret while knowing or having reason to know it was acquired by “improper means”, and (ii) disclos - ing or using a trade secret without express or implied consent where the person used improper means to acquire knowledge of the trade secret, or knew or had reason to know their knowledge of the trade secret was derived from someone who utilised improper means, and acquired it under circumstances giving rise to a duty of secrecy, or obtained it by accident or mistake. Because misappropriation can rarely be proved by direct evidence, plaintiffs often rely on circumstantial evidence. For example, in Aristotle International, Inc. v Acuant, Inc. , the court found that, under both DTSA and DCUTSA, the plaintiff stated a trade secrets claim based on circumstantial evidence
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