USA – NEW JERSEY Trends and Developments Contributed by: Galit Kierkut and Martin C. Fojas, Greenberg Traurig, LLP
held that a confidential list merely containing pass - words to a variety of the company’s systems and client databases was not a trade secret. Although the infor - mation protected by such passwords may be trade secrets, the court held that the passwords themselves were not valuable, particularly because the company immediately rendered the list of passwords useless by simply changing the passwords. New Jersey courts have held that numerous catego - ries of confidential business information meet the definition of a trade secret, such as pricing, business plans and strategies, contact lists, and data compila - tions. A trade secret with economic value may also include proprietary manufacturing processes, devel - opment methods, testing protocols, and regulatory strategies. Defining trade secrets in New Jersey litigation Recently, trade secret litigation in New Jersey has continued to define what information qualifies as a trade secret and what plaintiffs must allege to identify the trade secret adequately in each stage of litigation. New Jersey courts have held that trade secrets must be described with sufficient particularity to distinguish the information from “matters of general knowledge in the trade”. A plaintiff in a trade secrets case does not have to “spell out the details” of a trade secret at the pleading stage, but must at least provide suf - ficient information “to place a defendant on notice of the bases for the claim being made against it... and to permit the defendant to ascertain at least the bounda - ries of within which the trade secret lies”. A plaintiff may be able to identify the trade secret by pointing to an example of the trade secret or by identifying confidential documents containing trade secrets that the defendant has allegedly misappro - priated. Thus, for example, in a recent New Jersey decision, plaintiff alleged that its former employee misappropriated a confidential document by sending it to his personal email address, when the document contained aspects of plaintiff’s confidential business plans, pricing, business initiatives and strategy, perfor - mance, and financial analysis. Although the categories of information alleged to have been taken were simi - larly vague and generic, the plaintiff’s reference to the document containing the trade secrets was sufficient
to allow the defendant and the court to “ascertain at least the boundaries within which the secret lies”. New Jersey courts often find, as noted above, that customer lists constitute trade secrets, even if the customer lists contain publicly available information, so long as the plaintiff has created or compiled the list, maintained it, and took steps to keep it secret. For example, courts in New Jersey have recently rejected defendants’ arguments that customer lists are not entitled to protection because the list could easily be recreated by reference to the public sources or the internet, or by asking customers for their information. On the other hand, although a private compilation of publicly available information may constitute a trade secret, the publicly available information contained in the compilation is not entitled to trade secret protec - tion. New Jersey courts have held that while a plain - tiff’s customer list was a trade secret, plaintiff did not own the underlying customer contact and personal information, and where the customers provided that information directly to the defendant, defendant’s use of such information did not constitute misappropria - tion, even if the customers would not have provided that information to the defendant without the plaintiff’s efforts. Alleging reasonable measures to protect secrecy in New Jersey litigation The plaintiff in a trade secrets case must allege that it took “reasonable measures” to maintain the secre - cy of the trade secret at issue. Such measures may include non-disclosure and confidentiality agree - ments, appropriate facility security protections, and employment agreements containing non-compete and non-solicitation covenants. New Jersey courts have also found that computer network restrictions, software security systems, and employment policies requiring employees to return company property at the time of separation may constitute reasonable efforts to maintain secrecy. New Jersey courts have not required perfect secrecy or required plaintiffs to demonstrate extraordinary measures to maintain the secrecy of trade secrets. Rather, the standard is one of what is reasonable under the circumstances.
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