What is a Trade Secret
       Thirty-six states, including Virginia and the District of Columbia, have adopted the Uniform Trade Secrets Act.  For the most part, federal and state laws involving trade secrets co-exist with little conflict.  The U.S. Supreme Court determined that the federal preemption doctrine will not apply to invalidate states’ trade secret laws because federal patent law (the relevant federal law) and the states’ trade secret laws have the same objectives.  The Court held that state trade secret law does not “stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” with respect to federal patent law.

Virginia law states that a trade secret is defined as “information that:

  1. derives economic value from not being generally known to (or readily ascertainable by) others who can profit from its disclosure or use (like competitors); and
  2. is the subject of reasonable efforts to maintain its secrecy.”
            

Under Virginia law, misappropriation of a trade secret and threatened disclosure, even without actual disclosure or use of the trade secret by an offending party, warrants relief in Virginia courts. However, misappropriation of a trade secret alone without threatened disclosure, will not support an injunction.  The more a business has invested in researching, discovering or compiling certain information, even if such information is publicly available in a different form, the more likely it is that courts will treat such information as a trade secret. The current Restatement of Unfair Competition simplifies and expands the definition of a trade secret to “any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.”         

The subject matter of a trade secret must be kept confidential for the protection available under the Virginia statute to apply.  However, a trade secret does not have to be absolutely secret or known to only a handful of people to be protected. Failure by a trade secret owner to protect its trade secrets deprives the information of its “secret” character.  In other words, if a trade secret owner does not treat information as secret, the law will not.  Matters of public knowledge, information generally known within an industry, or information easily learned through legal methods are not trade secrets.  Also, common knowledge within a trade or industry group cannot be converted into a trade secret by one of the group’s members.  Other forms of proprietary information or intellectual property which do not readily fall into the trademark, copyright, or patent law categories may often be protected as trade secrets.  Anyone with a protectable commercial interest may own a trade secret. There is no requirement that the trade secrets of a business relate to the business’s primary function.

Codified at Va. Code Ann.  §§ 59.1-336-343.

Kewannee Oil Co. v. Bicron Corp., 416 U.S. 470, 479 (1974).

Va. Code Ann. § 59.1-336.

Id. § 59.1-337. See also Motion Control Sys. v. East, 262 Va. 33, 546 S.E.2d 424 (2001); Smithfield Ham & Prod. Co. v. Portion Pac, Inc., 905 F. Supp. 346 (E.D. Va. 1995).

See Motion Control Sys., 262 Va. at 37, 546 S.E.2d at 425, 426.  Here, in contrast to copyright law, courts do follow the “sweat of the brow” logic.  The more time and company resources expended to develop information, the more likely a court is to recognize such information as a trade secret and protect it accordingly.

Dionne v. Southeast Foam Converting and Packaging, Inc., 240 Va. 297, 397 S.E.2d 110 (1990).