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New Jersey Trade Secrets Act Signed by Governor
Practical Law Legal Update 0-517-1765 (Approx. 4 pages)
New Jersey Trade Secrets Act Signed by Governor
by PLC Labor & Employment and PLC Intellectual Property & Technology
| Published on 10 Jan 2012 • New Jersey |
The New Jersey Trade Secrets Act has been signed into law by Governor Christie. This law creates specific remedies for employers to protect trade secrets from misappropriation.
On January 9, 2012, Governor Christie signed the New Jersey Trade Secrets Act (NJTSA) into law. This law is a version of the Uniform Trade Secrets Act and codifies much of the state's existing common law protections.
The NJTSA takes effect immediately, although it does not apply to trade secret misappropriations that occurred before its effective date, even if the misappropriation is ongoing. These claims will be governed by New Jersey common law.
Definition of Trade Secret
Under the NJTSA, a trade secret is defined as information, regardless of form, that both:
- Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other people who can gain economic value from its disclosure or use.
- Is the subject of reasonable efforts, under the circumstances, to maintain its secrecy.
This definition eliminates the "continuous business use" requirements under New Jersey common law (see Ahlert v. Hasbro, Inc., 325 F. Supp. 2d 509, 513-514 (D.N.J. 2004)).
No Proper Means Defense
Codifying New Jersey common law, the NJTSA provides that an individual cannot defend against a misappropriation claim by arguing that proper means existed to obtain the protected information.
Statute of Limitations
The NJTSA shortens the statute of limitations for trade secret misappropriation claims to three years. This period begins to run when the misappropriation is discovered or should have been discovered.
Remedies
Injunctive relief is available for both actual and threatened trade secret misappropriation claims.
The NJTSA requires a court to preserve the secrecy of an alleged trade secret during litigation by reasonable means consistent with court rules.
In the case of willful and malicious misappropriation, New Jersey employers may receive punitive damages under the NJTSA. Punitive damages are limited at two times the basic damages. Basic damages include both:
- Actual loss.
- Any unjust enrichment not included in the actual loss value.
A party may also obtain attorney's fees and costs, including a reasonable amount to cover expert fees, in cases where misappropriation is willful and malicious, or where a claim of misappropriation or request to terminate an injunction is made in bad faith.
In exceptional circumstances, the NJTSA provides that a court may issue an injunction that conditions future use of a trade secret on the payment of a reasonable royalty to the trade secret owner. This royalty is only owed for the period when use of the information would have been prohibited. This may apply in situations where an individual uses a misappropriated trade secret before discovering the information was improperly taken and therefore an injunction prohibiting use is inequitable.
Relationship to Other New Jersey Laws
The NJTSA supersedes conflicting state laws providing civil remedies for misappropriation of a trade secret, but is otherwise in addition to and cumulative of any rights, remedies and prohibitions under common or statutory law.