FYI: to help give some context to the discussions. This is taken from a source focusing on employer - employee relations. However, much of it is extend to the general concept of ownership and "due diligence" in regards to the measures taking to secure IP and/or "trade secrets". If you look at the last paragraph you may find that of particular interest. ['tôrt] Anglo-French, wrongful or illegal act, from Old French, injury, from Medieval Latin tortum, from Latin, neuter of tortus twisted, from past participle of torquere to twist : a wrongful act other than a breach of contract that injures another and for which the law imposes civil liability: a violation of a duty (as to exercise due care) imposed by law as distinguished from contract for which damages or declaratory relief (as an injunction) may be obtained Definition in the Restatement (Third) of Unfair Competition The Restatement (Third) of Unfair Competition defines a trade secret as: "A trade secret is any information that can be used in the operation of a business or other enterprise that is sufficiently valuable and secret to afford an actual or potential economic advantage over others." Restatement (Third) of Unfair Competition (1995). The definition is intended to be consistent with the UTSA. Comment b, Restatement (Third) of Unfair Competition. The comments to the Restatement (Third) of Unfair Competition note: "A trade secret may consist of a formula, pattern, compilation of data, computer program, device, method, technique, process, or other form or embodiment of economically valuable information. Atrade secret may relate to technical matters such as the composition or design of a product, a method of manufacture, or the know-how necessary to perform a particular operation or service. Atrade secret may also relate to other aspects of business operations such as pricing and marketing techniques or the identity or requirements of customers." Comment d, Restatement (Third) of Unfair Competition, §39. Trade Secret Criteria The criteria adopted by the Restatement (First) of Torts for determining whether a trade secret exists are: * The extent to which the information is known outside of the business; * The extent to which it is known by employees and others involved in the business; * The extent of measures taken to guard the secrecy of the information; * The value of the information to the business and to competitors; * The amount of effort or money expended in developing the information; * The ease or difficulty with which the information could be properly acquired or duplicated by others. Restatement (First) of Torts, §757, comment b. The "Secrecy" Requirement The subject matter of a trade secret must be secret. Furr's Inc. v. United States Advertising Co., 385 S.W. 2d 456 (Tex. Civ. App.1964), cert. denied, 382 U.S. 824 (1964); Thermotics, Inc. v. Bat-Jac Tool Co., Inc., 541 S.W. 2d 255 (Tex. Civ. App. 1976). Trade secret protection, however, is not lost if the secret is discovered through "improper means." The UTSA defines "improper means" as "theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means." The Restatement (Third) of Unfair Competition simply requires that the information be "secret." The comments state: "The rule stated in this Section [39] requires only secrecy sufficient to confer an actual or potential economic advantage upon one who possesses the information. Thus, the requirement of secrecy is satisfied if it would be difficult or costly for others who could exploit the information to acquire it without resort to the wrongful conduct proscribed under § 40." Comment f, Restatement (Third) of Unfair Competition, §39 (1995). The Duty To Protect Trade Secrets The trade secret owner is under a duty to take reasonable steps to preserve the secrecy of the trade secret. E.I. duPont deNemours & Co., Inc. v Christopher, 431 F.2d 1012 (5th Cir. 1970), cert. denied, 400 U.S. 1024 (1971). If the owner of a trade secret is subsequently found to have inadequately protected the secret, protection will be denied. The property is deemed to have been forfeited. One of the principal precautions taken to protect trade secrets is the use of employee non-disclosure or confidentiality agreements. Surgidev Corp. v. Eye Technology, Inc., 828 F.2d 452 (8th Cir. 1987) (requiring employees to sign nondisclosure agreements, restricting visitor access to sales and administrative areas, keeping customer information in locked files, and distributing customer information on a "need-to-know" basis was sufficient to meet the "reasonable precaution" test). The requirement to take reasonable steps to preserve the secrecy of the trade secret varies with the circumstances of each case, and simply having each employee sign confidentiality agreements may not be adequate to preserve trade secret protection if the other precautions taken are not sufficient. See Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W. 2d 890 (Minn. 1983); see also Junkunc v. S.J. Advanced Technology and Manufacturing Corp., 498 N.E. 2d 1179 (Ill. App. Ct. 1986). Practical Considerations To Protect Trade Secrets Although the courts continually caution that the circumstances of each case will vary, several basic requirements for protecting trade secrets can be gleaned from the cases: * Reasonable precautions against industrial espionage; * Marking plans and documents "confidential;" * Use of "confidentiality" legends, warnings and agreements; * Restricting visitors and similar types of plant security; * Locking up or otherwise securing sensitive information; * Taking technical precautions, such as dividing the system into steps handled by different individuals or departments; * Copy protection and embedded codes to trace copies; and * Employee exit interviews. #In the event of litigation, it should be clear that the employer has done #everything reasonable within its power to protect its trade secrets. See #Schalk v. State, 823 S.W. 2d 633 (Tex. Cr. App. 1991) (evaluating what #constitutes requisite 'measures' to protect trade secret status), cert. #denied, 503 U.S. 1006 (1992). "Vigilance in the area of trade secrets is #required, particularly because once a trade secret is made public, all 3ownership is lost." Computer Associates Intern. v. Altai, Inc., 918 S.W. 2d 3453, 457 (Tex. 1994). #The general rule is that the employer should make sure that its confidential #information is accessible only to those with a "need to know" it. For a list #of practical considerations to protect trade secrets see Appendix 4.