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Trade secrets are protectable in New York courts

On Behalf of | Feb 22, 2022 | Litigation

A New York business may not need a patent, copyright or trademark to protect its valuable trade secrets. Indeed, in some cases, a business trade secret would not be eligible for such protection.

New York is a bit different than most other states in that it does not have any statutes on the books to protect trade secrets. As such, businesses have to rely on the judge-made common law in order to protect their trade secrets.

What is a trade secret under New York law?

It may seem obvious, but a trade secret first and foremost has to be a secret. Information known to the public does not get legal protection.

Furthermore, New York courts will look to the facts and circumstances to decide whether a business gets economic benefits from keeping information a secret from competitors and the general public.

To give a clear example, the formula for a New York City’s restaurant’s secret sauce may be a trade secret, but the details of the restaurant’s weekly food and supply orders would not be.

Even if the restaurant would rather not have its orders discussed publicly, there is little to no economic benefit to keeping it secret.

On the other hand, the secret sauce may be what drives the business’s sales, and letting the formula for it fall into a competitor’s hands could cost the business dearly.

Also, in order for information to qualify as a trade secret, a business has to show it took reasonable steps from letting the information leak. A so-called open secret is not a protectable trade secret.

A New York court is supposed to consider a number of factors when deciding whether a business has a protectable trade secret.

Businesses have options when they need to protect their business secrets

Businesses in New York may file litigation against another business or individual for misappropriation of a trade secret.

What this means is the other person must have obtained the secret improperly, such as through spying or breach of an employment duty to keep information confidential.

While it can be a difficult a process, sometimes a business will have to rely on trade secret litigation to protect its economic interests.