One area where employers often “donate” their proprietary information is in the form of trade secrets. Either the employer does not have the policies, procedures, and training in place to protect the confidentiality of trade secrets, or does not pursue former employees or others who misappropriate trade secrets. While all employers must still protect the confidential nature of trade secrets, the enforcement provisions just got easier and more lucrative for employers in Pennsylvania.

Joining a growing list of 44 States, Pennsylvania recently adopted the Uniform Trade Secrets Act (“UTSA”). The UTSA will enable employers to more easily define and protect trade secrets, as well as make it more enticing to pursue employees or others who misappropriate trade secrets.

Initially, the UTSA provides a specific definition of the term “trade secret” as follows:

Information, including a formula, drawing, pattern, compilation including a customer list, program, device, method, technique or process that: (1) derives independent economic value, actual or potential, from not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy,

This definition, which differs somewhat from prior Pennsylvania caselaw, is more consistent with the national standard, thereby alleviating to some extent jurisdictional concerns, particularly involving entities involved in electronic commerce.

The UTSA also explicitly includes “customer lists” within the definition of trade secret. Again, such a determination is somewhat inconsistent with prior Pennsylvania cases, which were reluctant to include customer lists within the scope of trade secrets. The Legislature also clarified pre-existing criminal penalties for trade secret misappropriation, to include misappropriation by “computer” (i.e., employee download or breach to steal trade secrets).

However, the two biggest changes under the UTSA relate to available remedies and available damages First, the UTSA opens the door for injunctive relief to prevent “threatened” misappropriation of trade secrets and, potentially, “inevitable disclosure” injunctions, which would preclude a former employee from working for a competitor because it would be impossible for the former employee not to use his former employer’s trade secrets.

Moreover, the UTSA clarifies the harmed entity’s scope of damages, to include unjust enrichment damages, exemplary (as opposed to punitive) damages, and attorney’s fees. Previously, employers were not able to seek attorneys fees as a result of a misappropriation, thereby limiting the viability of pursuing a misappropriation by a former employee or his new employer.

The UTSA should be carefully reviewed and considered by all employers. The threat of potential criminal penalties, can, if used properly, represent a substantial deterrent to rogue employees. Further, the heightened remedies, most particularly the availability of attorneys fees, render enforcement of the proprietary nature of trade secrets more viable to employers.

However, employers should consider an internal review to insure that they are taking the necessary steps to protect the confidentiality and proprietary nature of their trade secrets. Without those protections being in place before a misappropriation, there will be no basis to pursue a claim under the UTSA.

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Robert J. Tribeck is Administrative Chair of Rhoads & Sinon’s Business and Banking Litigation Group and a member of the Firm’s Employment and Labor Law Group, where he regularly counsels employers, large and small, on all issues of employment and labor law. For more information about the Uniform Trade Secrets Act, the protection of trade secrets, training, or an internal review of current safeguards, Attorney Tribeck can be reached at (717) 237-6701 or rtribeck@rhoads-sinon.com.