Last week, I published a post that asked whether confidential information that is not a trade secret can be misappropriated. In response, several people commented on LinkedIn and on the blog that if a plaintiff did not have its employees sign a confidentiality agreement, the company would not succeed on a Uniform Trade Secrets Act claim. Essentially, these commentators argue that if a company does not have those with access to its proprietary information sign a confidentiality agreement, it has not reasonably protected this information as required by the UTSA.
I disagree, at least to a point. If a UTSA claim could only be brought where the company and the defendant had a written contract, there would essentially be no need for the UTSA; the plaintiff could just sue for breach of contract or specific performance. Also, a company could still take a number of other steps to protect its proprietary information, which could rise to the level of reasonable protections. For example, if a company implemented password protections, clearly informed its employees of their obligation to keep certain info confidential, and limited sharing of confidential information to those employees who need access, a court could find that the company acted reasonably. Absent these types of protections, however, the lack of a confidentiality agreement would likely be fatal to a UTSA claim.
Of course, having a confidentiality agreement makes bringing a UTSA claim much easier. And I highly recommend that all companies have their employees and vendors execute such an agreement. But all hope is not lost without one.
Any other opinions? Feel free to share below.
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