USA – NEW JERSEY Trends and Developments Contributed by: Galit Kierkut and Martin C. Fojas, Greenberg Traurig, LLP
Elements of a trade secret claim in New Jersey To prevail on a claim for misappropriation of trade secrets under the DTSA or the NJTSA in New Jersey, a plaintiff must establish three elements: • the existence of a trade secret; • that the trade secret was subject to reasonable measures to maintain its secrecy; and • that the trade secret has been misappropriated or is threatened to be misappropriated. There is no heightened pleading standard for trade secret misappropriation claims in New Jersey. New Jersey courts not only recognise a claim for actu - al misappropriation but allow a court to grant a tempo - rary or permanent injunction to prevent any actual or threatened misappropriation of trade secrets. Under the DTSA, a court may enjoin an actual or threat - ened misappropriation of trade secrets so long as the injunction does not prevent a person from becoming employed or practising a lawful profession, trade, or business in the state. Any injunction under the DTSA must also be based on evidence of threatened misap - propriation, including circumstantial evidence, such as evidence that the new position will be overlapping with the position in which trade secrets were learned, where the concept of inevitable disclosure may apply. What information qualifies as trade secret in New Jersey? The DTSA defines a trade secret as “all forms and types of financial, business, scientific, technical, economic, or engineering information, including pat - terns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, process - es, procedures, programs, or codes...”, where two additional conditions are met: • the owner thereof has taken reasonable measures to keep such information secret; and • the information derives independent economic value, actual or potential, from not being gener - ally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.
Similarly, the NJTSA defines “trade secret” as “infor - mation, held by one or more people, without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype 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. New Jersey courts require that the subject matter of the alleged trade secret actually be a secret, rather than merely the plaintiff’s proprietary information; New Jersey trade secret protections typically terminate once the information becomes public knowledge. For example, when a company is developing a new prod - uct in secret, information relating to that product may qualify as a trade secret, but it will no longer qualify as a trade secret once the product is released on the market if the secret information is actually disclosed. Likewise, a commercial process described in a draft patent application will lose trade secret protections once the patent application is filed and the process is publicly disclosed through patent applications. Confidential compilations of public information may be deemed trade secret in New Jersey. A company’s critical business information, including client lists, compiled customer information, market and financial analyses, research materials, and data compilations may be protectable trade secrets, even if the underly - ing information is publicly available. In addition, trade secret information will not lose trade secret protection solely because portions of it are publicly available. For example, New Jersey courts may extend trade secret protections to pricing information, purchase orders, customer complaint information, strategies, market - ing information, and even patent information, provided that there is a non-public aspect of the information that goes beyond what is publicly available. A trade secret must also have economic value. In a recent decision, the Third Circuit Court of Appeals
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