In late September the New Jersey Senate passed a bill that would supplant the common law with new statutory remedies for misappropriation of trade secrets.
The Trade Secrets Act (S-2456/A-921), which is predicted to pass the Assembly as well, would impose civil liability for the improper acquisition or disclosure of a trade secret. The Act provides for injunctive relief to prevent the disclosure or use of a trade secret as well as damage remedies, including actual loss, unjust enrichment or recovery of a "reasonable royalty" for the use of the trade secret. Punitive damages in the amount of twice the damages would be available in instances of willful and malicious misappropriation, as well as legal fees and expert witness costs. The Senate bill defines trade secret more broadly than the Uniform Trade Secrets Act, which has been adopted in 46 states. The Senate would encompass "a formula, pattern, business data compilation, program, device, method, design, diagram, drawing, invention, plan, procedure, prototype or process" if it derived independent economic value from not being generally known or ascertainable, and if it was subject to reasonable efforts to maintain its secrecy. The bill also clarifies what conduct could not be the basis for liability and defines "proper means" for acquisition of trade secret information to include reverse engineering, independent invention, discovery under license from the owner, observation of the information in public use or from review of published literature.
The original draft of the bill had included a presumption in favoring of granting protective orders to protect trade secrets during discovery. That provision did not survive lobbying by the New Jersey Press Association, and the bill now provides for the protection by reasonable means consistent with the court rules. The Senate bill would take effect immediately, but would not apply to misappropriations that occurred before its effective date, even if the conduct was continuing.
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