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Do I Have a Trade Secret?

A trade secret is business or technical information that is not generally known and not readily ascertainable through independent development or reverse engineering as long as the owner takes reasonable steps to protect the secrecy.

1. Does North Carolina protect trade secrets?

Yes. North Carolina has adopted an amended version of the Uniform Trade Secrets Act “(“UTSA”). The Trade Secrets Protection Act (NCTSPA) can be found at N.C. Gen. Statutes §§66-152 to 66-157. It was enacted in 1981.

2. How do I know if I have a protectable trade secret?

Under certain prescribed conditions, the following can be a protectable trade secret under the NCTSPA

  • business or technical information, including but not limited to:
    • a formula,
    • a pattern,
    • a program,
    • a device,
    • a compilation of information,
    • a method,
    • a technique, or
    • a process.

In order to be protectable, however, the secret must derive independent actual or potential commercial value from not:

  • being generally known or
  • readily ascertainable through independent development or
  • readily ascertainable through reverse engineering by persons who can obtain economic value from its disclosure or use; and
  • is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Further, North Carolina courts will consider an additional six factors to assist in determining whether material constitutes a trade secret:

  1. the extent to which the information is known outside the business;
  2. the extent it is known to those within the business;
  3. the measures taken to guard its secrecy;
  4. the value of the information to the business and its competitors;
  5. the amount of time and money spent to develop the information; and
  6. the ease or difficulty of properly acquiring or developing the information by others.

In subsequent postings we will be discussing how to protect your trade secrets, the remedies available for misappropriation, and possible defenses to claims. If you have valuable business or technical information that you want to protect or have been accused of misappropriation, you should contact as lawyer as soon as possible.