New Jersey is currently one of just four states that has not passed a version of the Uniform Trade Secrets Act, but that could all change soon.
On September 19, the Senate Commerce Committee unanimously recommended passage of A-921/S-2456. An amendment included by the committee required the bill to be returned to the Assembly for final legislative approval after it is approved by the state Senate. It has now been submitted to the Governor, who is expected to sign it.
Under current New Jersey law, trade secrets are largely protected by common law and the Computer Related Offenses Act. N.J.S.A. 2A:38A-3(a). The adoption of the Uniform Trade Secrets Act would grant trade secret protection in a manner that federal law does not provide. Currently, federal law protects patents, copyrights and trademarks. In New Jersey, there is no statute that directly protects trade secrets. The adoption of this uniform law would provide plaintiffs with the opportunity to receive civil remedies under New Jersey state law if their trade secrets are misappropriated.
New Jersey, New York, Massachusetts and Texas are the only states that have yet to pass versions of the Uniform Trade Secrets Act. However, the law is pending in Massachusetts.
The law would allow plaintiffs the opportunity to seek the following remedies:
- There would be damages for both actual loss suffered by the plaintiff and for any unjust enrichment enjoyed by the defendant as a result of the misappropriation. Damages may also include the imposition of reasonable royalty for unauthorized disclosure or use.
- There would be injunctive relief for actual or threatened misappropriation of a trade secret. (Under certain conditions, an injunction may condition future use upon payment of a reasonable royalty.)
- Where there is willful and malicious misappropriation of a trade secret, punitive damages in the amount of double the compensatory damages would be available under the statute to be awarded by the court;
- The award of attorney’s fees would be authorized if
- Willful and malicious misappropriation exists;
- A claim of misappropriation is made in bad faith; or
- A motion to terminate an injunction is made or resisted in bad faith.
The amended bill also states that if a public entity or employee is the defendant in any action brought for the misappropriation of a trade secret, the provisions of the state’s Tort Claims Act supersede any conflicting provisions of the bill. So the very short deadlines for providing notice of a claim against a governmental entity would apply to this cause of action. Additionally, an amendment to the bill removes the presumption in favor of granting protective orders in connection with discovery proceedings pursuant to section 4:10-3(g).
The passage of this bill would be significant for New Jersey businesses because it would provide both legal relief if there is actual misappropriation of trade secrets and also injunctive relief if one believes there might be an actual or potential misappropriation. Of course, this law has not yet been passed, and even if it is (as is expected), it would be wise for businesses to still consider whether to include language in service and employment agreements that account for how trade secrets and similar confidential information is handled.
© 2011 Nissenbaum Law Group, LLC