1. The Molder has proprietary processing information, financial and marketing plans, and a customer list that he or she wants to keep secret;
   
   
2. The Molder wants to avoid any legal claims made by a competitor when the competitor's former employee comes to work for the Molder;
   
   
3. The Molder wants to avoid claims by a customer or potential customer that an invention or product design has been unjustly appropriated by the Molder, or has been transferred to a third party.

The concept of Trade Secret protection existed in English common law whichwas adopted in most of United States. Most states have replaced their common law trade secret provisions with the adoption of a model law. The model law is known as the Uniform Trade Secrets Act and is a product of the National Conference of Commissioners on Uniform State Laws. Although most states have adopted the Uniform Trade Secrets Act, there are some variations from state to state.

In general, a trade secret is information which:

1. Has independent economic value;
   
   
2. Because it is not generally known to the public or to persons who can obtain economic value from its disclosure or use;
   
   
3. Reasonable efforts have been made to maintain its secrecy.

In some states, other than California, the second element includes information which is not readily ascertainable.

The Uniform Trade Secrets Act provides for several remedies for the violation of trade secrets law. The most common remedy is an injunction or restraining order, however in some circumstances a court might award lost profits or impose a royalty. In appropriate circumstances, a court may award attorney fees to a party who successfully prevails, or to a party who successfully defends a trade secrets claim. The injured party has additional rights if the secret has been obtained through improper means such as theft, bribery, misrepresentation, breach of a duty to maintain secrecy, or misappropriation by an individual who knows that the secret was obtained by improper means.



1. THE MOLDER'S OWN TRADE SECRET PROTECTION

In order for a Molder to maintain secrecy over proprietary information, there should be a non-disclosure agreement signed by visitors, customers, and new employees prior to disclosure. Reasonable efforts should be made during the course of the disclosure to maintain secrecy such as limited disclosure on a need to know basis only.

Visitors should not simply sign a registration form and receive a visitor's badge! The visitor should sign an agreement that all information disclosed by the Molder is proprietary and confidential, and that the visitor will not disclose any information to third parties.

Prior to employment new employees should sign a non-disclosure agreement. This is sometimes done in conjunction with an non-competition agreement. Some states, such as California, do not enforce non-competition agreements unless the agreement is part of the sale of a business. The states which do enforce non-competition agreements do so if the limitations are reasonable as to duration, geographical territory, and type of product or industry excluded.
There are two purposes in having a non-disclosure agreement signed by the new employee:

1. The Molder must make reasonable efforts to maintain secrecy;
   
   
2. The Molder should impose a fiduciary duty upon the employee to maintain the company secrets.
   

At regular intervals, perhaps at the time of performance reviews, the employee should be reminded of his or her fiduciary duty, and any agreements to maintain and protect company trade secrets. At the time of termination the employee should be reminded of the Molder's rights to protect trade secrets and of the employee's continuing duty not to disclose those secrets.



2. THE MOLDER'S PROTECTION AGAINST TRADE SECRETS CLAIMS MADE BY A COMPETITOR

The Molder's human relations department needs to have in place several procedures for review of potential trade secret problems prior to an employment interview. During the interview the prospective employee should be asked if he or she understands the nature of the employment position and if the prospective employee believes that he or she can perform the duties of that position without violating any fiduciary duty of confidentiality to the competitor or former employer. Care should be taken not to inquire as to the substance of any trade secret or confidential information. If the potential employee can address this concern affirmatively and in good faith, the employee should sign an agreement that no disclosure will be made and that the prospective employee will maintain the secrecy of any information obtained through prior employment. At regular intervals, perhaps at the time of performance evaluations, employees should be reminded that there is a duty to maintain the former employer's secrets or confidential information. These procedures, interviews and performance reviews should be documented.

An evolving area in Trade Secrets law is the doctrine of "Inevitable Disclosure." Certain key employees will be unable to separate and maintain the confidentiality of information obtained from prior employment. A recent federal case in this regard involved a marketing executive of a soft drink company who went to work for a competitor. The court issued an injunction which prevented the executive from working for the competing soft drink company for a period of time because he possessed confidential market strategy which would inevitably be disclosed during the course of his new employment in the competitor's marketing department.



3. THE MOLDER'S PROTECTION AGAINST TRADE SECRETS CLAIMS MADE BY A CUSTOMER OR PROSPECTIVE CUSTOMER

Proprietary Molders need to make reasonable efforts to ascertain ownership ofa product prior to its purchase. All of the research and development logs should be examined and included in the purchase of any new product.

Custom Molders need to first evaluate the general nature of the product prior to reviewing the design for quotation, and prior to signing a potential customer's non-disclosure agreement. The Molder should have a written agreement that the potential customer is the owner or is otherwise legally entitled to the design, invention, or the information which is about to be disclosed.


CONCLUSION


Protection under the Trade Secrets Act requires the Molder to make reasonable efforts to maintain secrecy. The prudent Molder needs to set up internal procedures to protect his or her own trade secrets, as well as to preclude any trade secret claims by competitors and third parties. These efforts and procedures should be documented.


Mark S. Mahoney. Esq.