Lack Of Reasonable Protective Measures Costs Trade Secret Status
A recent Alabama Court of Appeals case, Jones v. Hamilton, Case No. 2081077 (January 22, 2010), illustrates how a failure to take reasonable steps to maintain the confidentiality of documents and information will result in the loss of trade secret status.
In Jones, the parties' trade secret dispute centered on the alleged misappropriation of confidential and sensitive documents that were left in an unmarked cardboard box for at least a week in the backseat of a company-owned car to which various company employees had access. The documents were not marked "confidential," and the keys to the vehicle were either kept "on a peg" or in the front of an office where they were widely accessible. Even though there was no evidence that anyone other than the defendant accessed the vehicle or the documents without authorization, "[t]he documents were left vulnerable to whomever chose to enter or to drive the vehicle."
Based on this vulnerability, the Court held that the documents were not "trade secrets" within the meaning of Alabama's version of the Uniform Trade Secrets Act and that the defendant therefore was not guilty of trade secret misappropriation. In reaching its conclusion, the Court did not focus on the sensitivity of the documents; rather, by itself, the company's failure to take reasonable steps to ensure the security of the documents precluded them from qualifying as trade secrets.
Hence, this case illustrates the importance of taking reasonable steps to protect the secrecy of alleged trade secrets. Although what is "reasonable" will vary depending on the circumstances, the bottom line is that if a company hopes to protect documents or information as a "secret," they need to be treated as such.
