Trade Secrets, Corporate Espionage and

Trade secrets consist of information not generally known or easily ascertainable that provides the owner with a competitive advantage because the information is secret and the owner has taken steps to keep it secret. Corporate or industrial espionage occurs when one company spies on another to steal its trade secrets or proprietary information. Every business has proprietary or confidential information, some of which may be protected as trade secrets. In an information economy, where ideas and innovation have value, trade secrets are an important form of intellectual property. They constitute the largest class of assets and the most valuable property for most U.S. corporations. Trade secrets may involve technical information, such as details for a new manufacturing process. Secret recipes for a cola, cupcake frosting, and cookies can also be trade secrets. Courts have found nontechnical information to be trade secrets, including plans for new products, methods of [Page 2091]doing business, competitive studies, and nonpublicly available information about customers.

A large number of both civil cases for trade secret misappropriation and criminal cases for corporate espionage involve insiders. This might occur when an employee downloads trade secret information from the company's server to take to a new employer. Recently, cases of corporate espionage, involving competitors using improper or illegal methods to gain access to trade secrets, have been on the rise. These cases have included the use of technology to try to steal trade secrets from a competitor's computer systems and a college student employee of a copying service photocopying trade secrets from a civil litigation case. Trade secret law protects proprietary information. It also regulates competitive business conduct that amounts to unfair competition. Trade secret law seeks to draw the line between lawful competitive intelligence and unlawful commercial espionage. As one Supreme Court justice put it, the purpose of trade secret law is to maintain the “standards of commercial ethics and the encouragement of invention.”