May 2006
By ALLAN P. HILLMAN
L ike forty-two other states, Connecticut
(in 1985) adopted the Uniform Trade
Secrets Act (UTSA), C.G.S. Title 35, Chap.
625, §§ 35-50-58. A trade secret is defined in as:
…information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list 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.Ӥ35-51 misappropriates the information; and
(h) the ease or difficulty with which the information could be properly acquired or duplicated.
2. True Or False:
Customer lists and information about customers’ preferences, business plans and pricing are invariably protected as trade secrets.
3. True Or False:
Where an employee develops information comprising a trade secret on company time, the information belongs to the company but, when the employee leaves, she may use it unless barred by contract.
How Is Your Trade Secret IQ?
Try This Test:
1. Multiple Choice:
Identify which factors courts consider in determining whether information is a trade secret: (a) the extent the information is known outside the business; (b) the extent the information is known by employees and others in the business; (c) the extent of measures taken to guard secrecy; (d) the value of the information to the owner; (e) the value of the information to competitors; (f) the amount of effort, time and money expended in developing the information; (g) the animus toward the owner by a person who
4. True Or False:
If the individual parts or steps of a formula or mechanical process are in the public domain, the resulting combination, i.e., the product, is in the public domain.
5. True Or False:
Misappropriation (improper acquisition or use, §35-51(b)) includes improper obtaining or using information that is purely negative, i.e., that permits one to steer clear of dead-ends in development.
6. True Or False:
A plaintiff may sue for fraud and unfair trade practices for misappropriation of her trade secrets.
trade secrets takes the assets subject to later claims by a third party that some assets improperly incorporate its trade secrets.
8. True Or False:
In the course of negotiations looking toward a joint manufacturing project, if one party discloses to the other detailed manufacturing information, but the parties enter into no express agreement protecting that information, the discloser has waived its right to trade secret protection.
9. True Or False:
All of these remedies are available under the UTSA: (a) injunctions; (b) required reasonable royalties if future use is not enjoined; (c) damages for losses; (d) damages for unjust enrichment; and (e) punitive damages up to twice actual damages.
Allan P. Hillman is a partner at Shipman &
Goodwin, where he practices franchise, antitrust and intellectual property law.
7. True Or False:
As a matter of public policy, a buyer of business assets without knowledge of the
10. True Or False:
Attorneys’ fees are awardable automatically to a winning plaintiff under the UTSA.

T H E C O N N E C T I C U T
may 2006
1.
All but (g).
Weseley Software Development Corp. v. Burdette , 977 F.Supp.137 (D.
Conn. 1997).
2. False.
Customer lists can be trade secrets, ¶35-51, but often are not. Often the nature of the business or industry is such that it is not difficult to amass a list of potential customers. On the other hand, customers’ detailed purchasing plans, special needs, and other information not readily ascertainable can be protected. If price lists are maintained as confidential, they may be protected, but only as long as the prices are in use.
Elm City Cheese Co., Inc. v.
Federico , 251 Conn. 59, 752 A.2d 1037
(Conn. 1999).
Allen Mfg. Co. v. Loika , 145 Conn. 509, 144
A.2d 306 (Conn. 1958).
5. True.
OnLine Technologies, Inc. v.
Perkin-Elmer Corp , 253 F.Supp 2d 313 (D.
Conn. 2003), aff ’m in pertinent part , 386
F.3d 1133 (Fed. Cir. 2004).
was on notice of the secret owner’s claim at the time of purchase.
OnLine Tech, supra , 141 F.Supp. 2d 246 (D. Conn. 2001)
(Opinion on motion to dismiss).
8.
Not necessarily. Where recipient knows that the information is a trade secret, and would not have been disclosed absent the negotiations, a confidential relationship is created and recipient has an implied duty not to use the information if the deal is not made, Schreyer v. Casco
Products Corp.
, 190 F.2d 921 (2d Cir. 1951).
But get it in writing!
9. True.
¶¶ 35-52-53; Smith v. Snyder ,
267 Conn. 456, 839 A.2d 589 (Conn.
2004); Elm City Cheese, supra , Answer 2.
10. False.
Fees are awardable only where the court finds the punitive damage standard (willful and malicious misappropriation) is satisfied. ¶35-53 (b).
3. False.
If the employee gained the knowledge as stated, it belongs to the company unless the company transfers it to the employee’s ownership.
Town &
Country House & Homes Service, Inc. v.
Evans , 150 Conn. 314, 189 A.2d 390
(Conn. 1963).
4. False.
Even where the elements are public or common, the result may be a trade secret.
Dreamcatcher Software Development, LLC v. Pop Warner Little Scholars,
Inc.
, 298 F.Supp. 2d 276 (D. Conn. 2004);
6. False.
The Act preempts all nonstatutory claims except contractual claims, criminal liability and certain statutory duties of disclosure. ¶35-57.
OnLine Tech, supra , Answer 5.
7. False.
The buyer is not liable unless it
9-10 Correct Trade Secret Connoisseur
7-8 Correct Reread the cases
5-6 Correct Reread the statute and the cases
0-4 Correct Let’s keep this a secret!
■
This article is reprinted with permission from the May 2006 edition of THE CONNECTICUT LAW TRIBUNE. © 2006 ALM
Properties, Inc. All rights reserved. Further duplication without permission is prohibited. For information, contact ALM, Reprint
Department at 800-888-8300 x6111 or visit www.almreprints.com
. #301-05-06-0005