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1. ARTICLE: THE EVOLUTION OF TRADE SECRET LAW AND WHY COURTS COMMIT ERROR WHEN THEY
DO NOT FOLLOW THE UNIFORM TRADE SECRETS ACT, 33 Hamline L. Rev. 493
Client/Matter: -None-

ARTICLE:THEEVOLUTIONOFTRADESECRETLAWANDWHYCOURTS
COMMITERRORWHENTHEYDONOTFOLLOWTHEUNIFORMTRADE
SECRETSACT
Summer,2010
Reporter
33HamlineL.Rev.493

Length:25657words
Author:SharonK.Sandeen*
*ProfessorofLaw,HamlineUniversitySchoolofLaw,St.Paul,Minnesota.ThedetailedhistoryoftheUniformTrade
SecretActthatissetforthinthisarticlewouldnothavebeenpossiblewithoutthehelpandcooperationoftheAmericanBar
AssociationandtheUniformLawCommission.Eachorganizationgavemeaccesstotheirhistoricalrecordsandprovidedme
withcopiesofpertinentdocuments.Iparticularlywishtoacknowledgeandthank,RichardCollins,theLibrarian/Record
SupervisorattheAmericanBarAssociationandKatieRobinson,CommunicationsOfficerattheUniformLawCommission
fortheirhospitalityandassistancewhenIvisitedtheirofficesinDecember2009.Thanksmustalsobeextendedtonumerous
researchassistantswho,throughtheyears,helpedmetocompilereamsofrecordsandresearchconcerningthedrafting
historyoftheUTSA,includingNickDatzov,KristyEvans,KrisHuether,KarlyKauf,TriciaNiebuhr,DanielNielsen,Emily
Sipiorski,AmandaSkorr,AngelaSmelund,andCarenStanley.

LexisNexisSummary
GiventhelonghistoryofthedevelopmentandapplicationofcommonlawtradesecretprinciplesintheUnitedStates
roughlyfromthedateofthefirsttradesecretcasesinthemid1800sthroughthemid1960swhentheUTSAdraftingprocess
beganonemaywonderwhymembersofthepracticingbarfeltcompelledtoadvocatefortheadoptionofauniformlawto
governtradesecrets.Thus,inthesamewaythattheLindsaylegislationwasdesignedbothtofillthevacuuminunfair
competitionlawthatwasleftbyErieandtoprovidemoreuniformity,certainty,andclarityinthelawofunfaircompetitionat
thefederallevel,theproposeduniformstatelawsweredesignedtosupplementandchangeabodyoflawthatwasthoughtto
bedeficient,includingthelawoftradesecrecy. Accordingtoa1962reportbytheUnfairCompetitionCommitteeof
NCCUSL,althoughitwasrecognizedthattherewereseveralformsofunfaircompetition,forpurposesoftheadoptionof
uniformlawsitwasdeterminedthatthelawofunfaircompetitionshouldbedividedintothefollowingtwogeneralareas:(1)
AnActdealingwithfalse,confusingordeceptivetradeidentificationandfalse,confusingordeceptiverepresentationsasto
thesourceororiginofgoods;and(2)AnActdealingwithtradesecretsandconfidentialdisclosures. Ontheother
extreme,theycouldfollowthemodelofpatentandcopyrightlawandimposewhatis,inessence,aformofstrictliability;
thatis,theUTSAcouldhaveimposedliabilityforthemereacquisition,disclosure,oruseoftradesecretswithoutrequiring
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itsmisappropriation.Althoughitmayhavebeentemptingtodrafttheremediesprovisionstobenefittradesecretowners,
thedraftersoftheUTSAtookamorebalancedapproach,recognizingthatbusinessesmightfindthemselvesoneithersideof
atradesecretmisappropriationclaim.AlthoughfivestatesquicklyadoptedtheUTSAsothatitwentintoeffectinthose
statesin1981,itwasnotuntilSeptember2,1988,whenAlaskabecamethetwentysixthstatetoenacttheUTSA,thatthe
UTSAreplacedtheRestatementFirstasthepredominantbodyoflawgoverningtradesecretsintheUnitedStates.

Text
[*493]

I.INTRODUCTION
Alllawsevolve.Typically,inthecaseoftortlaw,thedevelopmentofthelawbeginswiththecommissionofaperceived
wrongthatleadssomeonetofilealawsuitallegingharm,followedbythedecisionofsociety(oftenthroughtheagencyof
courts)toprovideoneormoreremedies.Asanyonewhohasstudiedthedevelopmentofthetortofnegligentinflictionof
emotionaldistresscanattest,althoughanindividualmaybehurtbythewrongdoingofanother,itoftentakesdecadesfora
causeofactiontoberecognizedbycourtsorcodifiedinastatute. 1Then,evenwhenoneormorestatesrecognizeacauseof
actionfortheallegedwrongdoing,otherstatesmaybeslowtofollowtheirleadormayrejectthenewcauseofaction
altogether. 2Amongthosestatesthatarewillingtorecognizeanewtort,theparametersofthecauseofaction(including
applicabledefenses)maybedefinedsothattheavailabilityofreliefisnarrowlycircumscribed.Tothechagrinofbusiness
interests,sometimesnewtortsaredefinedtoobroadlyorimpreciselysothatitisdifficulttodeterminewherepotential
liabilitybeginsandends.
Intheory,thefitsandstartsandebbsandflowsoftheevolutionaryprocessofthelawreflectsocietalvalues.Althoughithas
beensaid,"foreverywrong,thereisaremedy,"therearedifferingperceptionsaboutwhat [*494] constitutescognizable
wrongdoingandcognizableharm,andtheseperceptionscanchangeovertime. 3Generally,courtsandlegislatureshavebeen
reticenttorecognizenewcausesofactionmerelybecausesomeoneorsomeinterestwasharmedinsomeway. 4Inaddition,
theyusuallyrequirethattheactsofthedefendantbedeemedblameworthyor,inthecaseofnoncontractbasedcausesof
action,"tortious." 5 Fortheinjuredplaintiffwhoisdeniedaremedy,thismayseemlikeacruelresultbut,intheory,it
reflectsabalancingofcompetinginterests.Asasociety,wecannotaffordtogiveeveryonewhosuffersfromtheslingsand
arrowsoflifereliefinacourtoflaw.Evenwhereacauseofactioniscreated,weoftenlimititsreachtoaccommodateother
societalintereststhataredeemedmoreimportant.
Thelawofunfaircompetition,ofwhichtradesecretlawisapart,hasevolvedlikeotherprinciplesoftortlaw.Initsearly
incarnations,businessmencomplainedofvariousactivitiesbycompetitorsthatcausedthemharm.Theirfirstchallengewas
toarticulatesomebehaviorbythedefendantthatwasblameworthyandresultingharmthatcommonlaworequitycourts
deemeddeservingofrelief.Whenaplaintiff'scomplaintsfocusedontheconsequencesofcompetition,judgeswerereticent

11See2DanB.Dobbs,TheLawofTorts,TopicC,NegligentInflictionofEmotionalDistress(West2001)(providingabriefhistoryof
thedevelopmentofthetortofnegligentinflictionofemotionaldistress).

22See,e.g.,KevinE.Bry,GenuinelyDistressing:Illinois'FailuretoAllowaCauseofActionforEmotionalInjuriesCausedByNegligent

MishandlingofaCorpse,23J.MarshallLa.Rev.353(1990)(discussinglimitsthatthecourtsofIllinoisplacedonaclaimfornegligent
inflictionofemotionaldistress);JosephMatye,BystanderRecoveryforNegligentInflictionofEmotionalDistressinMissouri,60UMKC
LawRev.169(1991)(discussingthereluctanceofMissouriCourtstorecognizeaclaimfornegligentinflictionofemotionaldistress
sufferedbyabystander).Cf.Robersonv.RochesterFoldingBoxCo.,64N.E.442(N.Y.1902)(providinganexampleoftheslowreception
ofanewtortbydemonstratingthatNewYorkcourtsrefusedtorecognizeaclaimforinvasionofprivacyundercommonlawfollowingthe
publicationofSamuelWarrenandWilliamBrandeis,TheRightofPrivacy,4Harv.L.Rev.193(1890));Lakev.WalMartStores,Inc.
582N.W.2d231(Minn.1998)(demonstratingthatMinnesotaonlyrecognizedthreeofthefourprivacytortsin1998,morethan100years
afterWarren'sandBrandeis'sfamousarticle);butcf.Pavesichv.NewEnglandLifeInsuranceCo.,50S.E.68(G.A.1905)(demonstrating
thatotherstates,suchasGeorgia,recognizedclaimsforinvasionofprivacy).

33SeeJonathanM.Hoffman,QuestionsBeforeAnswers:TheOngoingSearchtoUnderstandtheOriginsoftheOpenCourtsClause,32
RutgersL.J.1005(2001)(discussingthehistoryoftheprinciplethateverywrongdeservesaremedyanditsinclusionintheconstitutions
ofthirtyninestates);DavidSchuman,TheRighttoaRemedy,65Temp.L.Rev.1197(1992)(discussingtheoriginsofstateconstitutional
"remedyguarantees,alsoknownas'opencourtsclauses'").

44SeegenerallyG.EdwardWhite,TortLawinAmerica:AnintellectualHistory(2003).
55Restatement(First)ofTorts6(1934)(statingthat"tortious"denotes"conductwhetheranactoromission[that]isofsuchacharacter
astosubjecttheactortoliabilityunderprinciplesofthelawoftorts").

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torecognizeanycauseofactionorentitlementtorelief. 6Theabilityoftheplaintifftooperateasuccessfulbusinesswas
consideredinsufficienttooutweightheimportantsocietalvalueoffreecompetition.However,asbusinesspeoplewereableto
explain how their competitor's actions crossed the line from "fair" to "unfair" competition, the common law of unfair
competition,includingtradesecretlaw,begantoemerge. 7Asitdid,twocountervailingconcernsarose:howtoensurethat
theemergingbusinesstortswererecognizedanddefinedconsistentlythroughouttheUnitedStates;and [*495]howtolimit
thescopeofbusinesstortssothattheywouldnotbecomeanticompetitiveweapons.
Havingemergedfromthecommonlaw,tradesecretlawcouldhavecontinuedtodevelopthroughthecommonlawprocess
likeavarietyofothertorts.Insuchcase,thecourtsofeachstatewouldhavehadthefreedomtoacceptorrejectvarious
argumentsfortherecognition,expansion,ornarrowingoftradesecretlawastheysawfit,subjecttoprinciplesofstare
decisisandthedirection(ifany)oflegislatures.Foravarietyofreasons,however,theevolutionoftradesecretlawshifted
fromthecrucibleofthecourtroomandthecommonlawprocesstotheuniformlawmakingandlegislativeprocesses.This
articletellsthestoryofthatshiftandhow,asaresult,thechannelsinwhichthecourtsofmoststatescanoperatewhen
interpretingandapplyingU.S.tradesecretlawwereconfinedbytheadoptionoftheUniformTradeSecretsAct(theUTSA).
8

ThestoryoftheevolutionoftradesecretlawbeginsinPartIIwithabriefexaminationofthedevelopmentoftradesecretlaw
atcommonlawupthroughthepublicationbytheAmericanLawInstituteoftheRestatement(First)ofTorts,VolumeIVin
1939(hereinafterreferredtoas"theRestatementFirst"). 9 PartIIIthenexaminestheforcesandconcernsthatmotivated
membersofthePatent,Trademark,andCopyrightSectionoftheAmericanBarAssociation("thePTC")tobegindraftinga
uniformlawoftradesecrecyandthesubsequentreferralofthatworktotheNationalCouncilofCommissionersofUniform
StateLaw("NCCUSL"). 10PartIVseekstocuredeficienciesthatexistintheinterpretationandapplicationoftradesecret
lawbyprovidingadetailedhistoryofthecontext,purpose,andintendedmeaningoftheUTSA. 11Tounderstandthepurpose
andsignificanceoftheUTSAfully,PartVdiscussestheimportantdifferencesbetweenthecommonlawparticularlyas
expressedinaRestatementandacodified,uniformlaw.12
Generally,theideaforauniformacttogoverntradesecretsaroseamongthepracticingbaraspartofanextensiveandlong
term exploration of laws governing unfair competition. For more than twentyfive years, from [*496] the early1940s
throughthemid1960s,thepracticingbarwasextremelyconcernedthattheU.S.SupremeCourt'sdecisioninErieRailroad
Co.v.Tompkinsprecludedthecommonlawdevelopmentofunfaircompetitionlawatthefederallevel. 13Later,withthe
SupremeCourt'sdecisionintheSears/Compcocases,thepracticingbarworriedthatstateunfaircompetitionlaw,including
tradesecretlaw,woulddisappearaltogether.14TheideatoadoptauniformtradesecretsactaswellastheLanhamActof

66Restatement(First)ofTorts1cmt.a(acknowledgingreticencebyrecognizingaprivilegetocompete:"Thefreedomtoengagein

businessandtocompeteforpatronageofprospectivecustomersisafundamentalpremiseofthefreeenterprisesystem.");accord
Restatement(Third)ofUnfairCompetition1cmt.a.(1995)(providingfurthersupportbyframingcompetitionasarightratherthana
privilege).

77See,e.g.,Restatement(First)ofTorts,DivisionNine,interferencewithBusinessRelations(1939);HarryD.Nims,TheLawofUnfair

CompetitionandTradeMarks(4thed.1947);RudolfCallman,WhatisUnfairCompetition?,28Geo.L.J.585(1940).Seealso,Risdale
Ellis,TradeSecrets9(1953)(noting"thelineofdemarcationbetweenfairandunfaircompetitionisuncertainandmaychangefromone
decadetothenext").

88SeeUnif.TradeSecretsAct(1985);seealsoNationalConferenceofCommissionersofUniformStateLaws,
http://www.nccusl.org/Update/uniformactfactsheets/uniformactsfsutsa.asp(lastvisitedDec.28,2010)(demonstratingthattheUTSAhas
beenadoptedinfortyfivestates,theDistrictofColumbiaandtheU.S.VirginIslands,andthatthefivestatesthathaveyetadoptedthe
UTSAareMassachusetts,NewYork,NewJersey,NorthCarolina,andTexas);butseealsoJamesPooley,TradeSecrets2.03[7][a](1997)
(demonstratingthathowonecountsadoptionsapparentlydependsuponhowthetradesecretsstatutesarelabeledandstatingthat43states
haveadoptedtheUTSA,with3othersadoptingtradesecretstatutesnotpatternedontheUTSA).

99SeeinfraPartI.
1010SeeinfraPartII.ThePTCisnowknownastheIntellectualPropertySectionoftheAmericanBarAssociation.NCCUSLisalso
knownunderitsnew,updatedbrand:TheUniformLawCommission.

1111SeeinfraPartIII.
1212SeeinfraPartIV.
1313SeegenerallyErieR.R.Co.v.Tompkins,304U.S.64(1938).
1414SeegenerallyCompcoCorp.v.DayBriteLighting,Inc.376U.S.234(1964)(effectivelyrestrictingtheabilityofstatestofashion
unfaircompetitionlaws);Sears,Roebuck&Co.v.StiffelCo,376U.S.225(1964).

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1946,15theUniformDeceptiveTradePracticesAct(theUDTPA), 16andtheUniformTrademarksAct, 17grewoutofwhat


isreferredtohereinas"theErie/Sears/Compcosqueeze"andthebusinesscommunity'sinterestinwelldefined,predictable,
anduniformbusinesstorts.18
AlthoughtheinitialimpetusbehindtheadoptionoftheUTSAwasconcernthatEriepreventedthedevelopmentofafederal
bodyofunfaircompetitionlaw,ultimatelythedraftersoftheUTSAsawanopportunitytoalterthespeedandcourseof
developmentofthecommonlawoftradesecrecy. 19 Theuseofstatutestochange,andhopefullyimprove,thelawisa
commonstoryintheevolutionofthelaw.Businessesoftenpreferstatutorylawtocommonlawbecausestatutescanbeused
tosecurelegalprotectionforintereststhatcommonlawcourtsareslowtorecognize.Statutesarealsousedtomodify
existinglegalprinciplesby,forinstance,limitingthescopeofestablishedlegalrightsormoreclearlydefiningtheparameters
ofsuchrightsinordertoaddconsistency,predictability,anduniformity.Whenlegislatures [*497]heedthecallformore
consistency,predictability,anduniformity,judgesshouldtakenoticeanddiscontinuethecommonlawdevelopmentofthe
lawasappropriate.OnceabodyoflawiscodifiedasisthecasewithtradesecretlawasexpressedintheUTSAitisthe
statuteitselfandnottheoldcommonlawthatshouldgovern.20
II.THECOMMONLAWEVOLUTIONOFU.S.TRADESECRETLAW:1837THROUGH1939
BaseduponareviewofthecasescitedintheAppendixtotheRestatementFirst,thedevelopmentoftradesecretlawinthe
United Stated began in1837 withthe case ofVickery v. Welch, and was based on principles of law and equityfirst
developedbyEnglishcourts.21Twoessentialquestionsconfrontedearlycourtsintradesecretcases.Firstwaswhetherthe
actionsofthedefendantweresufficientlywrongfultojustifyrelief.Asonecourtframedtheissue,"[t]hedistinctionlies
betweenpiratingandcompetingforcustomers." 22Ifthefirstquestionwasansweredaffirmatively,thenatureofappropriate
reliefhadtobedetermined.BecauseadistinctionexistedintheearlyhistoryoftheUnitedStatesbetweencourtsoflawand
courtsofequity,thequestionofappropriateremediesoftenboileddowntothecourtwheretheactionwasfiledandhowthe
casewascharacterized.23

1515LanhamActofJuly5,1946,ch.540,60Stat.427(1946)(codifiedasamendedat15U.S.C.10511141(2010)).
1616NationalConferenceofCommissionersonUniformStateLaws,RevisedUniformDeceptiveTradePracticesAct(1966)(replacing
theactthathadfirstbeenadoptedin1964).SeealsoRichardF.Dole,UniformDeceptiveTradePracticesAct:EffectofSearsCompco,55
TrademarkRep.267(1965).

1717SeeH.BowenWands,Priority:LanhamActorModelStateTrademarkBill,58TrademarkRep.801(1968)(notingthataModel
StateTrademarkBillhadbeenadoptedinthirtysixstates).

1818JamesWillardHurst,DealingwithStatutes12(1982)(commentingontheshiftfromthecommonlawdevelopmentofthelawtothe
legislativeprocess:"Legislationbulkedlargerinsocialregulationwhenmorenumerousandvariedinterestsbegantopressclaimsfor
attention,andwhenpoliticallyeffectiveopinionsensedaneedtobringmorefactorsintopolicycalculations").

1919Unif.TradeSecretsAct,PrefatoryNote(1985)("Notwithstandingthecommercialimportanceofstatetradesecretlawtointerstate

business,thislawhasnotdevelopedsatisfactorily.Inthefirstplace,itsdevelopmentisuneven....Secondly,eveninstatesinwhichthere
hasbeensignificantlitigation,thereisundueuncertaintyconcerningtheparametersoftradesecretprotection,andtheappropriateremedies
formisappropriationofatradesecret.").SeealsoJohnP.Sutton,TradeSecretLegislation,9IDEA587,590(19651966)(afternotingthe
confusedstateoftradesecretlaw,particularlywithrespecttoitstheoreticalbasis,Mr.Suttonstated:"Itthereforewouldappearpropitious
thatlegislationispendingtobringsomedegreeoforderoutofchaos").

2020SeeRestatement(Third)ofUnfairCompetition,IntroductoryNote(1995)(demonstratingthattheRestatement(Third)ofUnfair

Competition,whichreplacedtheunfaircompetitionprovisionsoftheRestatement(First)ofTorts,recognizestheimportanceofstatutory
enactmentsbybasingmostofitscontentconcerningtradesecretsontheUTSA);seealsoDavidS.Almeling,etal.,AStatisticalAnalysis
ofTradeSecretLitigationinFederalCourts,45Gonz.L.Rev.291(2010)(providingempiricalevidencethattheinfluenceofthe
Restatement(First)ofTortsmaybewaning).ButseeRogerM.Milgrim&EricE.Benson,MilgrimonTradeSecrets1.01[1](2009)
("DespitetheUTSA'swidespreadadoption,theRestatement[First]Definition[oftradesecrets]retainsvitalityandisoftenreferredtoby
courtsduringthecourseoftheirdeliberationinapplyingtheUTSA.");Pooley,supranote8,at2.02[3](notingthatevencourts
interpretingtheUTSAcontinuetorefertotheRestatement(First)ofTorts).

2121Vickeryv.Welch,36Mass.523(1Pick.1837);seealsoPeabodyv.Norfolk,98Mass452(Mass.1868)(citingtonumerouspertinent
Englishcases)andCatherineL.Fisk,WorkingKnowledge:TradeSecrets,RestrictiveCovenantsinEmployment,andtheRiseof
CorporateIntellectualProperty,18001920,52HastingsL.J.441(2000).

2222NewarkCleaning&DyeWorks,Inc.v.Gross,126A.789(N.J.1925).
2323Ellis,supranote7,at4("Ingeneral,protectiongiventradesecretsisbasedoncommonlawandequityandnotonstatutory
provisions.");seealsoT.LeighAnenson,TreatingEquityLikeLaw:APostMergerJustificationofUncleanHands,45Am.Bus.L.J.455,
456(2008)(notingthatthemergeroflawandequityintheUnitedStatesbeganwiththeNewYorkFieldCodein1848andculminatedin
theFederalRulesofCivilProcedurealmostonehundredyearslater);JohnR.Kroger,SupremeCourtEquity,17891835,andtheHistory
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Thegeneralcomplaintofearlyplaintiffswasthatthedefendant [*498] causedorthreatenedtocauseharmtoplaintiff's


businessbyusingordisclosingsecretinformation.Forinstance,inVickeryv.Welch,theplaintiffcomplainedthatthe
defendantthreatenedtodisclosetheartandsecretmannerofmakingchocolate. 24Becausecourtswereunwillingtofindan
absolutepropertyinterestinsecretinformation,thesuccessofearlytradesecretcasesdependedupontheexistenceofan
expressorimpliedagreementofconfidentialityorbreachoffaith.25AstheCourtinPeabodyv.Norfolkexplained:
Ifheinventsordiscovers,andkeepssecret,aprocessofmanufacture,whetherapropersubjectforapatentornot,hehasnot
indeedanexclusiverighttoitagainstthepublic,oragainstthosewhoingoodfaithacquireknowledgeofit;buthehasa
propertyinit,whichacourtofchancerywillprotectagainstonewhoinviolationofcontractandbreachofconfidence
undertakestoapplyittohisownuse,ortodiscloseittothirdpersons.26
Asamatterofequity,thedefendantinPeabodywasboundbyanagreementofconfidentialitynottodiscloseinformation
aboutthemachinesandprocessesusedtomakegunnycloth.27
The existence of secret information coupled with an express or implied agreement of confidentiality made it easy for
commonlawcourtstoimposeliabilityonindividualsorcompanieswhowerepartiestotheagreementbecausebreachof
contractandbreachoftrustwerewellrecognizedwrongs.Themoredifficultissueforsomecourtswastodetermineifsecret
informationactuallyexisted.28Thisledtothedevelopmentofprinciplesfordifferentiatingbetweenprotectableinformation
andunprotectableinformation,includingtheconceptofreasonableeffortstomaintainsecrecy. 29InHamiltonManufacturing
Cov.TubbsManufacturingCo.,forinstance,theCourtwascarefultodistinguishbetweensecretinformationononehand
andpublicinformation,generalskill,andknowledgeontheother.30TheCourtnoted:
[*499]
Therecanbenopropertyinaprocess,andnorightofprotection,ifknowledgeofitiscommontotheworld.Itwouldbea
violationofeveryrightofanemployeeofamanufacturertopreventtheformerfromusing,inabusinessofhisown,
knowledgewhichheacquiredintheemployofthelatterwhenhemighthaveacquiredsuchknowledgeintheemployof
othermanufacturers.Indeed,acontractnottodosowouldprobablyfailofenforcementbecauseofarestraintoftrade. 31
Anotherissuethataroseinearlytradesecretcaseswastheextenttowhichanindividual'sdutyofconfidentialitycouldbe
imposeduponthirdparties.Becauseacriticalelementoftradesecretcaseswastheexistenceofanexpressorimplied
obligationofconfidentiality,individualsandcompaniesthatwerenotinprivityofcontractwiththecontractingparties,or
thatwerenototherwisesubjecttoadutyoftrust,couldnotbeheldliableforusingordisclosingaplaintiff'ssecrets.This
limitationonthescopeofthedutyofconfidentialityledtothedevelopmentoftheoriesofthirdpartyliabilitythatgenerally
requiredthethirdpartytohaveknowledgeofboththeexistenceofatradesecretandthedutyofconfidentiality.Forinstance,
inStonev.Goss,afterfirstfindingthatplaintiff'sformeremployee,Goss,wasunderadutyofconfidentiality,theCourt
imposedasimilardutyonGoss'snewemployerduetoitsintentiontoacquireplaintiff'ssecretinformation. 32Similarly,in
ofAmericanJudging,34Hous.L.Rev.1425(1998)(providingagoodhistoryofthedivisionofcourtsoflawandcourtsofequityinthe
earlyhistoryoftheUnitedStates);seealso,e.g.,Nims,supranote7,143("Equitywillrestrainbreachofacontractnottodiscloseatrade
secret.").

2424Vickery,36Mass.at52526.
2525See,e.g.,Morisonv.Moat,68E.R.492(Ct.ofChancery1851)("Whatwehavetodealwithhereis,nottherightofthePlaintiffs
againsttheworld,buttheirrightagainsttheDefendant");Stewartv.Hook,45S.E.369,370(Ga.1903)("Thepropertyrightinan
unpatentedpreparation,however,isnotanunqualifiedone,andisonlyexclusiveuntil,bypublication,itbecomesthepropertyofthe
public.").

2626Peabodyv.Norfolk,98Mass.452,458(Mass.1868);seealsoBlack'sLawDictionary247(8thed.2004)(demonstratingthata
"chancerycourts"werecourtsofequity).

2727Peabody,98Mass.at45253.
2828Taborv.Hoffman,23N.E.12(N.Y.1889).
2929See,e.g.,Schavoirv.AmericanRebondedLeatherCo.,133A.582(Conn.1926);HamiltonMfg.Co.v.TubbsMfg.Co.,216F.401,

40106(W.D.Mich.1908);Stonev.Goss,55A.736,737(N.J.1903);Tabor,23N.E.at12;McClaryv.Hubbard,122A.469(Vt.1923).

3030HamiltonMfg.Co.,216F.401.
3131Id.at407.
3232Stone,55A.736.
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VulcanDetinningCo.v.AmericanCanCo.,theCourtimposedadutyofconfidentialityonanoriginalincorporatorofthe
plaintiffdueto,amongotherthings,hisknowledgeofthefactthatthesecretshadbeenacquiredatgreatexpensefrom
another.33
Earlycourtswerealsotroubledwithissuesofstanding.Ifthewrongcommittedwas"unfaircompetition,"thentheywere
reluctanttograntrelieftoplaintiffswhowerenotincompetitionwiththeallegedwrongdoer.Asexplainedina1941article
bythePresidentoftheFederalTradeCommission:
Theearlyviewinthiscountry,asinmanyothers,limited[unfaircompetition]primarilytocasesofpassingofftheproductof
onecompetitorasandforanother.Today'sbroadviewofthetermasusedintheUnitedStatesembracesnotonlyallbusiness
practicesdeemedtobelegallyunfairtocompetitorsorbusinessrivals,butalsothoseconsideredtobeunfairtothepublic
generally....34
BythetimetheAmericanLawInstitutepublishedvolumeIVoftheRestatementFirstin1939,thecommonlawoftrade
secrecyhaddeveloped[*500]sufficientlysothatadefendant'sallegedwrongdoingcouldbedetailedinthreesections.Asset
forthin757,apersoncouldbeliablefordisclosingorusinganother'stradesecretbaseduponthetraditionaltheoryofa
breachofconfidence,butalsobecauseof:(1)discoverybyimpropermeans;(2)acquisitionofthesecretbyathirdpartywith
noticeofthefactofsecrecyandthedutyofconfidentiality;and(3)acquisitionofthesecretwithnoticeofthefactofsecrecy
andknowledgethatitwasdisclosedbymistake. 35Section758statedtherulethattheinnocentdiscoveryoftradesecretsis
not actionable,but createdanexceptionincaseswherethedefendant receivednoticeofthemisappropriationbeforea
materialchangeinhisorherposition. 36Section759addressedthesituationwherebusinessinformationnotqualifyingasa
tradesecretisacquiredusing"impropermeans,"statingthattheacquisitionofsuchinformationbyimpropermeanswas
actionableifitwas"forthepurposeofadvancingarivalbusinessinterest."37
AlthoughthetradesecretprovisionsoftheRestatementFirstattempttosummarizethestateoftradesecretlawcirca1939,
whatismoretellingisthecontentandorganizationofthecommentarythatfollowseachsection.Whiletradesecretlawhad
developedsothatthreeformsofwrongdoingcouldbesetforthin757through759,thepreciseparametersanddetailsofa
causeofactionwerelefttobedevelopedandrefinedbycommonlawcourts.Ratherthanstatespecificruleswithinthetext
ofthetradesecretprovisionsthemselvesapparentlybecausethelawhadnotevolvedsufficientlyinenoughstatestoallow
themtodosothedraftersoftheRestatementFirstonlyidentifiedkeyissuesandprovidedsuggestionsfortheirpossible
resolution.38Asnotedinthecommentsto757,theseissuesincluded:(1)howtobalancetheprivilegetocompetewiththe
existenceofatradesecretclaim;(2)thedefinitionofatradesecret;(3)thecircumstancesunderwhichadefendantshouldbe
heldliablefordisclosure(asopposedtouse)ofatradesecret;(4)whetherandtowhatextentaprivilegetodiscloseoruse
another'stradesecretsexists;(5)thenatureofavailableremedies;(6)themeaningof"impropermeans";(7)themeaningand
scopeofabreachofconfidence;and(8)thenecessaryintentorknowledgeofthedefendant.39
BythetimeoftheadoptionoftheUTSAin1979,fortyyearshadpassedsincethepublicationoftheRestatementFirstand
thedraftersoftheUTSAhadthebenefitofthefurthercommonlawdevelopmentoftradesecretlaw.Alsobythen,thecourts
oflawandequityintheUnitedStateshadmergedandtherewasamuchgreaterrelianceonandreceptionofstatutorylaw. 40
AsdetailedinPartsIIIandIVbelow,becausetheUTSAisacoderatherthanarestatementofexistinglaw,itwasusedtofill
gapsinthe[*501]lawthathadnotbeenfilledbycommonlawcourtsandtorefineorchangecommonlawprinciplesthat
wereconsideredilladvised.WithrespecttomanyoftheissuesthatareaddressedinthecommentstotheRestatementFirst,
thedraftersoftheUTSAsubstitutedtheflexibleguidelinesoftheRestatement'scommentswithmandatoryrules.
III.THEIMPETUSBEHINDTHEUTSA

3333VulcanDetinningCo.v.Am.CanCo.,67A.339(N.J.1907).
3434RobertE.Freer,SomeConceptsofUnfairCompetitionatHomeandAbroad,31TrademarkRep.51(1941).
3535Restatement(First)ofTorts757(1934).
3636Id.758.
3737Id.759.
3838Seeinfranotes4345andaccompanyingtext.
3939Restatement(First)ofTorts757,cmts.ag.
4040Seesupranote23andaccompanyingtext.
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Between1939and1988,theRestatementFirstwastheprimarysourceforanunderstandingofthepurposeandmeaningof
tradesecretlawintheUnitedStates. 41 Giventhelonghistoryofthedevelopmentandapplicationofcommonlawtrade
secretprinciplesintheUnitedStatesroughlyfromthedateofthefirsttradesecretcasesinthemid1800sthroughthemid
1960s when the UTSA drafting process beganone may wonder why members of the practicing bar felt compelled to
advocatefortheadoptionofauniformlawtogoverntradesecrets.Bythemid1960s,inadditiontotheRestatementFirst,
therewereplentyofjudicialdecisionsandseveraltreatisesavailabletojudgesandlawyersthatcouldbeconsultedtoexplain
thecurrentparametersofU.S.tradesecretlaw. 42Whythentheneedforauniformtradesecretlawthatwasrecommended
foradoptioninallfiftystates?
Oneanswerstemsfromtheslowpaceandfrequentlyinconsistentdevelopmentofthecommonlaw,andtheimpatienceof
individualsandcompanieswhobelievedthattheirinterestswerenotadequatelyprotected. 43 Althoughbusinessinterests
mayatfirstbereluctanttoembracethedevelopmentofnewtorts,particularlypersonalinjurytorts,thehistoryofunfair
competitionlawrevealsthatthereisoftenapointintimeinthedevelopmentofbusinesstortswhenbusinessinterestsprefer
toembraceaclearlydefined,predictable,anduniformcauseofactioninsteadofbeingsubjectedtotheuncertaintyof
amorphousandilldefinedcommonlawtorts.Indeed,thisisoneofthereasonsforthemergerofcourtsoflawandequity;
theunpredictabilityofequitycourtswasuncomfortabletomany. 44The [*502]powerofstateandfederallegislaturesto
enactlawsgivesthosewhoarefrustratedwiththeuncertaintyandpaceofthecommonlawtheabilitytospeeduporchange
thedevelopmentofthelawtobettersuittheirinterests.45Thispowerbecameparticularlyimportanttothepracticingbarasa
resultoftheU.S.SupremeCourt'slandmarkdecisioninErieRailroadCo.v.Tompkinsin1938.46
A.TheEffectofErie
MorethanseventyyearsremovedfromtheU.SSupremeCourt'slandmarkdecisioninErieandthesubsequentenactmentof
numerousfederallawsunderCongress'sCommerceClausepower,itisperhapshardtoimaginetheuproarthatEriecaused
amongthepracticingbarandU.S.businessinterests. 47Preciselyatthetimethatbusinessandindustrywasbecomingless
localized and more national and international, and the need for national legal standards became more pronounced, the
SupremeCourtruledthat,"thereisnofederalgeneralcommonlaw."48

4141SeeAlaskaStat.45.50,91045(demonstratingthattheUTSAbecamethepredominatelawgoverningtradesecretsintheUnited
StateswhenitwentintoeffectinAlaskathetwentysixthstatetoadopttheUTSAonSeptember2,1988).

4242SeeEllis,supranote7;Nims,supranote7,atCh.XI(concerningtradesecrets);DevelopmentsintheLaw:CompetitiveTorts,IV.

MisappropriationofCommercialIntangibles,B.TradeSecrets,77Harv.L.Rev.947(1964).SeealsoRogerMilgrim,MilgrimonTrade
Secrets(1sted.1968).

4343JuliusR.Lunsford,UnfairCompetition:UniformStateActNeeded,44Va.L.Rev.583(1958)(describingtheslowpaceofunfair
competitionlawpostErieandtheLanhamAct).

4444SeeCharlesM.Cook,TheAmericanCodificationMovement;AStudyofAntebellumLegalReform,18586(1981)("Theretention
oftheinheriteddualcourtsystemlawandequityin[NY]wasthecauseofmuchuncertaintyastothepropermodeofredressand,
consequently,asourceofadditionalbittercomplaint.").

4545SeeEdwardS.Rogers,NewConceptsofUnfairCompetition,38TrademarkRep.259,26970(1948),reprintedin54Trademark
Rep.752(1964)("Experienceshowsthatbythetimethejudicialmachineryreachesaplacewherethepiratewasyesterday,andisreadyto
dealwithhim,thatelusivepersonhasmovedforwardandisstillalittleaheadataplacewherethecourtswillnotreachuntiltomorrowand
isthereengagedindoingsomethingwhichwillenablehimtoadvantagehimselfatsomeoneelse'sexpenseinsomemannerhitherto
unthoughtof.").

4646ErieR.R.Co.v.Tompkins,304U.S.64(1938).
4747SeeE.ManningGiles,UnfairCompetitionandtheOverextensionoftheErieDoctrine,41TrademarkRep.1056(1951);JohnR.

Peterson,TheLegislativeMandateofSearsCompco:APleaforaFederalLawofUnfairCompetition,56TrademarkRep.16(1966);
HarryShulman,TheDemiseofSwiftv.Tyson,47YaleL.J.1336(1938);SergeiS.Zlinkoff,Eriev.Tompkins:InRelationtotheLawof
TrademarksandUnfairCompetition,32TrademarkRep.81,99(1942);Rogers,supranote45,at259.Seealso,TheProposedFederal
UnfairCompetitionStatute,BriefinSupportofCongressionalPassageofProposedUnfairCompetitionAmendmenttoLanhamTrademark
Actof1946,57TrademarkRep.87(1967)[hereinafterBriefinSupportofCongressionalPassage].

4848Erie,304U.S.at78;seeStatementofW.G.ReynoldsinsupportofUnfairActivitiesBill,54TrademarkRep.785(1964)(notingthe
"swingtodirectselling,"theincreasedimportanceofadvertising,andthe"mushroomingofsupermarkets"ascreatinganeweconomic
environmentwherefederalprinciplesofunfaircompletionareneeded).SeealsoPeterson,supranote47,at25("TheresultofErieinthe
fieldofunfaircompetition,hasbeenabewilderinghodgepodgeofconflictingdecisionswhichdefiesharmonizationintoauniform
nationalbodyoflaw.").
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AlthoughtheEriedecisionhadimplicationsforallrulingsofthefederaljudiciaryindiversitycases,itsimpactuponthelaw
ofunfaircompetitionwasofparticularconcerntoU.S.businessinterests.Initially,theconcernrelatedtotheinabilitytorely
uponfederalprecedentstodefinetheparametersofunfaircompetitionintheUnitedStates.BecauseofErie,thefederal
judiciarywasoutofthebusinessofdevelopingthecommonlawexceptinconnectionwiththeinterpretationandapplication
offederal[*503]statutes,meaningthatthedevelopmentandrefinementofunfaircompetitionlawwaslefttostatecourts. 49
However,"therubwasthatstatelawmarkedtimeduringtheperiodthatfederallawwasevolving"andhadnotdeveloped
sufficiently or consistently. 50 Thus, as Erie forced lawyers and their clients to learn more about principles of unfair
competitionatthestatelevel,theconcernabouttheirrelevanceoffederalprecedentswasreplacedbyafearabouttheactual
details(orlackthereof)ofstatelaw.Asexplainedinaninfluential1948articlebyEdwardS.Rogers:
SoontherewasbuiltupbydecisionsoftheFederalCourtagreatbodyofFederalLawdealingwithtrademarksandunfair
competition.Itwasagreatconveniencetothebarbecauselawyerskneworcouldeasilylearnwhatthedecisionswereand
therewereenoughofthemtogiveacomprehensivepicture.ThencameErie...whichrequiredFederalCourtstoapplythe
lawoftheStateinwhichtheysit,andtherewaschaos.Therewere48differentsovereignties,thedecisionsofwhosecourts
weretheonlylaw.ThebodyofFederaldecisionwhichwas50yearsevolvingwasnotbindingeitherontheStateorthe
FederalCourts.Nobodyknewwhatthelawwas.ItwasfrequentlyfoundthattherewerenoapplicableStatedecisionsorthat
thedecisionsintheStatescomprisingthesamecircuitwerenotuniform.51
SomeoftheconcernsregardingthegapsinunfaircompetitionlawthatresultedfromEriewereresolvedwiththeenactment
in1946oftheLanhamAct. 52 However,concernsaboutthescopeoffederaltrademarklaw,andmorebroadlyunfair
competitionlaw,continuedtopersistamongthepracticingbarformorethantwentyyears. 53Heedingtheoriginalcallof
[*504]EdwardRogers,theAssociationoftheBaroftheCityofNewYorkbegantoadvocatefortheadoptionofafederal
lawtogovernunfaircompetition. 54DesignedtotakeadvantageoftherecentlydevelopedLincolnMillsdoctrine,thegeneral
goalofafederalunfaircompetitionlawwas"topermitthefederalcourtstoresumethefashioningofauniformanddynamic
body of national unfair competitionlaw without compellingrecourse to variegated or inadequate state precedents, i.e.,
'checkerboardlaw.'"55

4949SeeGiles,supranote47,at1056(discussingthedifferencebetween"federalgeneralcommonlaw"and"federalcommonlaw"and
notingthepoweroffederalcourtstoconstrueandsupplementfederalstatutorylaw).

5050NationalConferenceofCommissionersofUniformStateLaws,RevisedUniformDeceptiveTradePracticesAct,PrefatoryNote
(1966)(reprintedasRichardDole,UniformDeceptiveTradePracticesAct:EffectofSearsCompco,55TrademarkRep.267,43536
(1965)).

5151Rogers,supranote45,at259;seeLouisKunin,TheLindsayBillBeforeandAftertheStiffelCase,54TrademarkRep.731,736
(1964)("FederalunfaircompetitionlegislationtocounteracttheeffectsofEriewassuggestedbyMr.EdwardS.Rogersspeakingbefore
thePracticingLawInstituteatNewYorkCityin1947.");seealsoRogers,supranote45,at271(demonstratingthatMr.Rogers'sproposed
legislationincludedabroadandflexibledefinitionofunfaircompetition,coupledwithalistofspecificactsofwrongdoingincludingthe
actof"inducingdisclosureofconfidentialinformation"and"anyotheractordeedcontrarytogoodfaithorhonorablecommercialusage.").

5252LanhamActofJuly5,1946,ch.540,60Stat.427(1946)(codifiedasamendedat15U.S.C.10511141(2010)).Cf.H.M.

McLarin,The1941RevisedLanhamTrademarkBill,BeingaDescriptionandHistoryofthe1941RevisionoftheLanhamTrademark
Bill,31TrademarkRep.87(1941)(givingthereasonsfortheLanhamBill,includingtheneedofmodernbusinessformorecertainty).

5353Lunsford,supranote43,at583(lamentingthefailureoffederalcourtstointerpret43oftheLanhamActasageneralfederallawof

unfaircompetition);Peterson,supranote47,at43("EvenastheLanhamActwasachievingjudicialrecognitionasalimitedfederallawof
unfaircompetition,workcommenceduponpresentationofaseparatefederalcodeofunfaircompetition.").

5454Peterson,supranote47,at43;seealsoKunin,supranote51,at736("FromMr.Rogers'firstdraft,afterseveralyearsofwork

commencedbytheCommitteeonTrademarksandUnfairCompetitionoftheAssociationoftheBaroftheCityofNewYork,therehas
nowevolvedtheLindsayBill.FirstintroducedintheHousein1959,itwaswidelycirculatedamongprofessionalgroupsandother
interestedparties.Arevisedversionwasreintroducedin1961.Afterfurthercirculationandcomment,theBillwasrevisedagainand
offeredin1962.Onceagain,afterthoroughreviewbyinterestedgroups,additionalamendmentsweremadebeforeacurrentversionofthe
BillwasintroducedinboththeHouseandSenatein1963.");SidneyA.Diamond,TheProposedFederalUnfairCommercialActivitiesAct,
52TrademarkRep.104(1962).

5555Kunin,supranote51,at73233(citingthedecisionoftheUnitedStatesSupremeCourtinTextileWorkersUnion,353U.S.448);see
alsoTextileWorkersUnionofAm.v.LincolnMillsofAla.,353U.S.448,456(1957)(holdingthattheLaborManagementRelationsActof
1947notonlygavefederalcourtsjurisdictioninlabordisputes,butenabledfederalcourtsto"fashionabodyoffederallaw"togovernsuch
disputes).
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Beginningwiththestartofthetwoyearlegislativesessionin1959,CongressmemberJohnLindsaybienniallyintroduced
legislationtoenactafederallawofunfaircompetitionthatwouldsupplementtheLanhamAct. 56Assetforthinthe1963
versionofthebill,theproposedlawwouldallow"anypersondamagedorlikelytobedamagedbyunfaircommercial
activitiesinoraffectingcommerce"tobringacivilactioninfederalcourttoobtaininjunctiverelief,costs,andreasonable
attorneys'fees.57Unfaircommercialactivitiesweredefinedtoinclude"thecommissionforpurposesofprofitofany...act
orpracticewhich...violatesreasonablestandardsofcommercialethics." 58Inordertoovercomethereluctanceofcommon
lawcourtstograntreliefincaseswheretherewasnodirectcompetitionandnoproofofactualdamages,thelegislation
furtherprovidedthatinjunctivereliefcouldbegranteddespitethe"absenceofcompetitionbetweenthepartiesoractual
damagetothepersonseekingprotection."59
TheLindsayBillreceiveditsfirstandapparentlyonlyformal [*505] hearinginJuneof1964. 60 CongressmanLindsay
explained,"ThebasicpurposeofthebillistocreateaFederalstatutorycauseofactionthatcouldbeinvokedbyaninjured
partyasanalternativetothecommonlawtortofunfaircompetitionincaseswhereinterstatecommerceisaffected." 61Inhis
testimonyinsupportofthelegislation,W.G.Reynolds,thenPresidentoftheUnitedStatesTrademarkAssociation,notedthat
thelegislationwouldfulfillthreeneeds:
(a)asoreneedtofillinmissinggapsinexistingremediesagainstunfaircommercialactivities;(b)aneedformodernizing
theseremediestocopewithdrasticchangesthathavebeengoingonallaboutusinthefieldofinterstatecommerce,and(c)a
needforencouragementtoreputablebusinessmenwhoarebewilderedandpuzzledbythefailureofthepresentlawto
providereliefcommensuratewiththeshiftingwrongswhichtheyareencounteringintheirdaytodaybusinessactivities. 62
Atthesametimefederallegislationwasbeingpursued,effortswerealsoundertakenbymembersofthepracticingbartofill
gapsinstateunfaircompetitionlawthrough,amongothermeans,theadoptionofanumberofuniformstatelaws,including
theUniformDeceptiveTradePracticesAct(UDTPA)andstatetrademarkregistrationacts. 63AsexplainedinthePrefatory
NotetotheUDTPA:
In1958theSectionofPatents,TrademarkandCopyright[*506]LawoftheAmericanBarAssociationpassedaresolution
whichstatedthat"thereshouldbeuniformityinthelawofunfaircompetitionamongtherespectivestates."...Sincethe
provisionsoftheLindseyBillandoftheUniformActaresufficientlysimilar,themainquestionistheroutebywhich
uniformityisobtainedvoluntaryadoptionbythestatelegislaturesorbyafederalactimposingaparticularruleonthestates.

5656SeeH.R.7833,86thCong.,1stSess.(1959);H.R.10038,87thCong.,2dSess.(1962);S.1036,87thCong.;S.2784,87thCong.;S.
1038,88thCong.

5757H.R.4651andS.1038,88thCong.1stSession(1963).
5858Id.3(d).
5959Id.4.
6060WalterJ.Derenberg,TheSeventeenthYearofAdministrationoftheLanhamTrademarkActof1946,54TrademarkRep.655(1964)
(notingfirsthearingonLindsayBillandoppositiontheretofromtheAttorneyGeneral'sOfficeandtheFederalTradeCommission).

6161HearingsonH.R.4651beforetheSubcommitteeonCommerceandFinanceoftheHouseCommitteeonInterstateandForeign
Commerce,88thCong.,2ndSession9(1964).

6262Rogers,supranote45,at785(emphasisadded).
6363NationalConferenceofCommissionersonUniformStateLaws,RevisedUniformDeceptiveTradePracticesAct(1966).Cf.Kunin,

supranote51,at375,73435(demonstratingthatotherstrategiesandtheoriesforresurrectingafederalbodyofunfaircompetitionwere
attemptedwithoutsuccess);e.g.id.at735(citingNationalFruitProds.Co.v.DwinnelWrightCo.,47F.Supp.499(D.Mass.1942))
(explainingthatbeginningin1942,therewasaseriesofcasesinwhichplaintiffsarguedthat5oftheFederalTradeCommissionAct
createdaprivaterightofactionthatwouldallowindividualsandbusinessestobringasuitinfederalcourt.);id.at735(citingStaufferv.
Exley,184F.2d962(9thCir.1950))(demonstratingthatin1950,theNinthCircuittookthepositionthat44(b),(h),and(i)ofthe
LanhamActconferredfederaljurisdictionoverunfaircompetitionclaims);id.at73435(citingKemartCorp.v.PrintingArtsResearch
Labs.,269F2d375(9thCir.1959))(statingthattherewasaseriesofcases,beginningwithKemartCorp.,inwhichitwascontendedthat
theunfaircompetitionprovisionsoftheParisConventionandtheInterAmericanConventionwereselfexecutingand,therefore,the
"supremelawoftheland"undertheU.S.Constitutionandthat,asaresult,federalcourtswereauthorizedtodevelopafederalbodyof
unfaircompetition);id.at375(citingL'AiglonApparel,Inc.v.LanaLobell,Inc.,214F.2d649(3dCir.1954))(arguingthat43(a)ofthe
LanhamActshouldbeinterpretedtocoverordinarycasesofpassingoffandproductsimulation).
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TheUniformActisdesignedtobringstatelawuptodatebyremovingunduerestrictionsonthecommonlawactionfor
deceptivetradepractices.Certainobjectionablepracticesaresingledout,butcourtsareleftfreetofixtheproperambitofthe
actincasebycaseadjudication.64
Thus,inthesamewaythattheLindsaylegislationwasdesignedbothtofillthevacuuminunfaircompetitionlawthatwas
leftbyErieandtoprovidemoreuniformity,certainty,andclarityinthelawofunfaircompetitionatthefederallevel,the
proposeduniform statelawsweredesignedtosupplement andchangeabodyoflawthatwasthought tobedeficient,
includingthelawoftradesecrecy.
B.TheErie/Sears/CompcoSqueeze
Theneedforafederallawtogovernunfaircompetitionbecamemoreurgentin1964asaresultoftheErie/Sears/Compco
squeeze.InthecompanioncasesofSears,Roebuck&Co.v.StiffelCo.andCompcoCorp.v.DayBriteLighting,Inc.,
decidedonthesamedateinMarch1964,theU.S.SupremeCourtruledthattheunfaircompetitionlawsofIllinoiswhich
prohibitedproduct simulation,werepreemptedbyfederalpatentlaw. 65 Thiscreatedadilemmaforbusinessinterests
concernedaboutthedevelopmentofunfaircompetitionlawintheUnitedStates.HavinglearnedfromEriethatthefederal
judiciaryhadaverylimitedroletoplayinthedevelopmentofcommonlaw,thepracticingbarwasnowshockedtolearnthat
theveryentitiesthatwerechargedwithdevelopingunfaircompetitionlawstatecourtsandlegislatureswerepreventedby
principlesoffederalpreemptionfromadoptingstatelawsthatinterferedwithfederalpatentpolicies. 66
JohnPeterson,thenChairmanoftheUnfairCompetitionCommitteeoftheAmericanPatentLawAssociation(nowthe
AmericanIntellectualPropertyLawAssociation)expressedtheconcernsofthepracticingbar:
[*507]
ThesweepinglanguageoftheCourtinSearsandCompcohasmadeituncertainhowthesedecisionsaretobeappliedin
subsequentcasespresentingdifferingfactualsituations,andwhethertheyaretobelimitedtocasesofproductsimulationor
aretobeextendedtothewholefieldofunfaircompetition.67
ThepracticingbarwassoconcernedabouttheimpactoftheSears/CompcodecisionsthattheUnitedStatesTrademark
Association(nowtheInternationalTrademarkAssociationor"INTA")regularlyreportedondevelopmentsintheareaof
stateunfaircompetitioninasectionofanannualreviewoftheLanhamActlabeled"UnfairCompetitionandtheSears
CompcoDoctrine,"laudinganydecisionthatappearedtolimitapplicationoftheSears/Compcodoctrine. 68
AnobvioussolutiontotheErie/Sears/CompcosqueezewastheenactmentoffederallegislationalongthelinesoftheLindsay
Bill.However,concernedmembersofthebarwerenotcontenttoleaveasolutionuptoCongress,particularlysincethe
LindsayBillhadnotprogressedmuchinfiveyears. 69 Apparently,thecriticaldifficultyinenactingsuchalawrevolved
aroundthedefinitionofunfaircompetition.Someproponentsofafederallawofunfaircompetitionfavoredbroad,general
languagethatmightprohibitstillunknownformsofunfaircompetition.Otherswerefearfulofanopenendeddefinition,and
advocatedforthespecificationofparticularwrongfulacts.Thus,inadditiontofederallegislation,variousotherstrategies

6464ConferenceofCommissionersonUniformStateLaws,RevisedUniformDeceptiveTradePracticesAct(1966).
6565SeegenerallyCompcoCorp.v.DayBriteLighting,Inc.,376U.S.234(1964);Sears,Roebuck&Co.v.StiffelCo.,376U.S.225
(1964).

6666SeeCiroA.Gamboni,UnfairCompetitionProtectionafterSearsCompco,55TrademarkRep.964(1965).
6767Peterson,supranote47,at28.
6868See,e.g.,BowenWands,supranote17,at710;WalterJ.Derenberg,TheTwentyFifthYearofAdministrationoftheLanhamActof
1946,62TrademarkRep.393,499(Aug.1972);WalterJ.Derenberg,TheTwentyFourthYearofAdministrationoftheLanhamActof
1946,61TrademarkRep.257,322(July1971);WalterJ.Derenberg,TheTwentyThirdYearofAdministrationoftheLanhamActof
1946,60TrademarkRep.387,462(Aug.1970);WalterJ.Derenberg,TheTwentySecondYearofAdministrationoftheLanhamActof
1946,59TrademarkRep.625,712(Aug.1969);KennethB.Germain,TheThirtyFourthYearofAdministrationoftheLanhamActof
1946,71TrademarkRep.285,495(JulyAug.1981);Peterson,supranote47,at776;BriefinSupportofCongressionalPassage,supra
note47,at735.

6969Peterson,supranote47,at45("ThisBill,representingadistillationofyearsofhardandpainstakingeffort,hasproducedreactions
rangingfromenthusiasticsupporttobitterdenunciation...ithasbeenattackedforitsvagueness,foritsfailuretogivedefinitiontothe
term'unfaircommercialactivity,'andforextendingthelawbeyondtheboundsoftheFederalTradeCommissionAct.").
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werepursuedincluding:argumentsmadeinavarietyofcasestolimittheeffectsoftheErieandSears/Compcodecisions;
proposedamendmentstotheFederalTradeCommissionAct;andtheadoptionofastateUniformDeceptiveTradePractices
Act.70Proposalswerealsomadefortheadoptionoffederallegislationtomakeitclearthatpatentlawwasnotintendedto
[*508]preemptstatetradesecretlaw. 71Thepracticingbar'sinterestinsolvingtheErie/Sears/Compcosqueezewassogreat
thata"NationalCoordinatingCommittee,"consistingofover36professionalassociations,wasformedforthepurposeof
finding a solution. 72 Members of this Committee included the American Patent Law Association, the United States
TrademarkAssociation,andthePTCSectionoftheAmericanBarAssociation.In1966,thePTCdecidedtoconsiderthe
needforauniformtradesecretlaw.73
C.TheWorkofthePTCSectionoftheAmericanBarAssociation
Asdetailedinthe1966ReportofCommittee402,thePTChadfrequentlybeenaskedtoconsiderwhatitreferredtoasthe
"perennialLindsayBill."74In1962,aresolutionfavoringthelegislationwasdefeatedbyamarginof75to66. 75In1963
and1964,however,resolutionsfavoringthebillwerepassed. 76TworeasonsweregivenforsupportoftheLindsayBill:the
needtoreplace"variegatedstateprecedentsresultingfromErie,"andtheneedtoresolve"thefederalstateconflict"notedin
theSears/Compcocases.77
WhentheLindsayBillstalledinCongress,itssupportersproposedtoeffectuateitspurposesbyamendingtheLanhamAct.
78
TherefollowedadditionaleffortsbymembersofthePTCandtheNationalCoordinating [*509] Committeetofashion
legislationthatwouldbeacceptabletoboththepracticingbarandmembersofCongress. 79Knownasthe"McClellanBill,"
aftertheSenatorwhointroducedit,anddenominatedthe"UnfairCompetitionActof1966,"thislegislationdifferedfromthe
LindsayBillinanumberofrespects,mostnotably,ratherthanestablishingaseparatefederallawofunfaircompetition,it
proposedvariousamendmentsto43oftheLanhamAct. 80 Amongitsproposedprovisionswasnew43(a)(4),which
wouldhaveimposedcivilliabilityonanypersonwhoengaged"inanyact,tradepractice,orcourseofconduct"that"results
orislikelytoresultinthewrongfuldisclosureormisappropriationofatradesecretorotherresearchordevelopmentor
commercialinformationmaintainedinconfidencebyanother."81
AsdescribedinabriefinsupportoftheMcClellanBill,thelegislationwasneededto:(1)fillthegapsinthecommonlawof
unfaircompetitionthatwereleftbyErie;(2)resolveconflictingstaterulingsandapproaches;(3)eliminatetheconflictof
lawsproblemresultingfromincreasedinterstatecommerce;(4)fostergreateruniformity;(5)provideaframeworkforthe

7070Id.at2848;seealsoid.,atn.181(givingahistoryoftheUniformDeceptiveTradePracticesAct);supranote68(providingcitations
fortheUnfairCompetitionandtheSearsCompcoDoctrinesectionintheTrademarkRep.,whichcitescasesrelevanttothisdiscussion).

7171TradeSecrets,InterferencewithContracts,andRelatedMatters,1974A.B.A.Sec.Pat.,Trademark&CopyrightL.CommitteeRep.
402,at25253(reportofRogerM.Milgrim,Chairman)[hereinafterTradeSecrets1974](detailingresolutionstothiseffectsince1969);
TradeSecrets,InterferencewithContractsandRelatedMatters,1973A.B.A.Sec.Pat.,Trademark&CopyrightL.CommitteeRep.402,
at17374(reportofRichardF.Dole,Chairman)[hereinafterTradeSecrets1973].

7272BriefinSupportofCongressionalPassage,supranote47,at8991,n.5.
7373Id.;seealsoProtectionofConfidentialRightsandKnowHow,1967A.B.A.Sec.Pat.Trademark&CopyrightL.CommitteeRep.
107,at59(reportofJamesM.Heilman,Chairman,Comm.107)[hereinafterProtectionofConfidentialRights1967];TradeSecrets,
InterferencewithContractsandRelatedMatters,1967A.B.A.Sec.Pat.,Trademark&CopyrightL.CommitteeRep.402,at140(report
ofRobertE.Isner,Chairman,Comm.107).

7474UnfairCompetition,1966A.B.A.Sec.Pat.,Trademark&CopyrightL.CommitteeRep.402,at126(reportofDaytonR.Stemple,

Jr.,Chairman)[hereinafterUnfairCompetition1966].Cf.UnfairCompetition,1963A.B.A.Sec.Pat.,Trademark&CopyrightL.
CommitteeRep.402,at164(reportofBoyntonP.Livingston,Chairman)[hereinafterUnfairCompetition1963](demonstratingthatat
thetimeofthedraftingoftheUTSA,Committee402wasthecommitteechargedwithconsideringissuesrelatedtothelawofunfair
competition,including"stateandfederallawsrelatingtotradesecrets,""problemsarisingoutofviolationsoftradesecretsandinducement
ofbreachofcontract,"and"otherpossibleformsofunfaircompetition").

7575UnfairCompetition1966,supranote74.
7676Id.
7777UnfairCompetition,1964A.B.A.Sec.Pat.,Trademark&CopyrightL.CommitteeRep.402,at10809(reportofLouisKunin,
Chairman).

7878TomArnold,AFederalUnfairCompetitionLaw,McClellanS.3681,89thCong.,57TrademarkRep.116,117(1967).
7979UnfairCompetition1966,supranote74,at12728.
8080SeeS.3681,89thCong.,2ndSessionandS.1154,90thCong.,1stSession.
8181Id.
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developmentofafederalcommonlawofunfaircompetition;and(6)provideforremediesconsistentwiththoseprovided
underthepatentandcopyrightstatutes. 82 Inotherwords,liketheUTSAthatfollowedit,theMcClellanBillwasnot
designedsimplytocodifyexistingprinciplesofunfaircompetitionlaw;itwasdesignedtoalterthoseprinciplesinseveral
respects.
DebateabouttheproposedUnfairCompetitionActof1966includedthequestionwhethertheActshouldincludeabroad
catchallprovisionorbelimitedtoaspecificlistofactionablewrongs. 83 Acompromisewasstrucktoincludespecific
examplesofunfaircompetitionfollowedbyagenericdefinitionofunfaircompetitionthat,consistentwiththelanguageof
Article10bisoftheParisConvention,prohibitedanyactthat"isotherwisecontrarytocommercialgoodfaithortonormal
andhonestpracticesofthebusinessoractivityinwhichheisengaged." 84Withrespecttotheproposedtradesecret [*510]
provision,anissuearoseabouthowtodraftthelanguagesothatitwouldcoverinformationthatwasnotabsolutelysecret
thatis,informationthatisdisclosedtoanotherinthecourseofaconfidentialrelationship. 85Duetocontroversyaboutthe
desiredbreadthofatradesecretprovision,twoalternativedefinitionsofprotectableinformationwereinitiallyproposed:the
"limited"provisionthatwasultimatelyselected,anda"broad"provisionthatwouldhaveprohibitedanyactthat"resultsoris
likelytoresult intheunfairimpairment orwrongful appropriationofatradesecret orcontract right of another oran
intangibleassetderivingfromtheinvestment,labororskilloranother."86
AtthesametimethatCommittee402ofthePTChadconvenedtoconsidertheadvisabilityofafederallawofunfair
competitionthatincludedprovisionsdealingwithtradesecrets,Committee107,ProtectionofConfidentialRightsandKnow
How,wasconsideringthesamequestion. 87Theprincipalconcernofthatgroupwasthatthescopeoftradesecretprotection
variedfromstatetostate,particularlywithrespecttothetreatmentofdepartingemployees. 88Concernwasalsoexpressed
thattheproposedamendmentstotheLanhamActwouldnoteliminatetheneedforstatelaw,andthatinconsistencyinthe
lawsofvariousstateswasleadingtoforumshopping.AsLeonardB.Mackey,ChairmanoftheProtectionofConfidential
RightsandKnowHow,stated:
Recentproliferationofvariousstatestatutes,eachtakingaslightlydifferenttackthantheothers,maycreateapatternof
legislationresultinginthesitusdeterminingtheprotectiontobeaffordedtheownerofatradesecret.Thisisundesirable.Itis
deemedhighlydesirablethattheproblembeapproachedthroughtheenactmentofauniformactbystatesinadditiontoany
amendmentofFederalstatutes.89
In1968,aresolutionfavoringtheadoptionofauniformtradesecretsactwasapprovedbythePTCand,consistentwitha
longstanding[*511]relationshipbetweentheABAandNCCUSL,thematterwasreferredtoNCCUSLforfurtherhandling.
90
Atthatpoint,Committee402ofthePTCgotinvolvedintheuniformlawmakingprocess. 91

8282BriefinSupportofCongressionalPassage,supranote47,at89.
8383UnfairCompetition1966,supranote74,at128("ThegenericapproachoftheLindsaybillandtheproposedamendmenttothe
LanhamActappearstobefavorednowbyalargemajority").

8484Id.at130;seealsoBriefinSupportofCongressionalPassage,supranote47,at104.Cf.SharonK.Sandeen,TheLimitsofTrade

SecretLaw:TheStoryofArticle39ofTRIPSandtheLimitedScopeofTradeSecretProtectionintheUnitedStates,inTheLawand
TheoryofTradeSecrecy,AHandbookofContemporaryResearch(RochelleDreyfuss&KatherineStrandburg,eds.,EdwardElgar,2011)
(explainingthatasimilarcompromisewasreachedinthedraftingofArticle39oftheWorldTradeOrganization,AgreementonTrade
RelatedAspectsofIntellectualProperty(theTRIPSAgreement),followingtheUnitedStates'sproposaltoaddtradesecret
misappropriationtothelistofactsofunfaircompetitionspecificallyrecognizedbytheinternationalcommunity).

8585BriefinSupportofCongressionalPassage,supranote47,at101.
8686Id.at12830("ThoseinfavorofbroadSection4[dealingwithtradesecrets]contendthatmisappropriationhasbecomearecognized

doctrineinthelawofunfaircompetitionandthatitwouldbewrongtoenactafederalstatute[sic]inthefieldthatdoesnotgiverecognition
ofsuchadoctrine.TheopponentsofthebroadSectionstatethatitiscontrarytotheexpresspolicyoflettingthecourtsdevelopthe
substantivelawwithoutstatutoryguideandthatitissobroadthatitincludesclassicpatentandcopyrightinfringementandcopyingof
patentedmechanismsafterthepatentexpireswhichshouldnotbecoveredbytheproposedAct.");seealsoid.at128(demonstratingthat
concernwasalsoexpressedthattheCommerceClausecouldnotbeusedtosupportthetradesecretprovisionsoftheproposedAct).

8787ProtectionofConfidentialRightsandKnowHow,1966A.B.A.Sec.Pat.Trademark&CopyrightL.CommitteeRep.107(report
ofChairmanG.FranklinRothwell).

8888SeeProtectionofConfidentialRights1967,supranote73,at59,61.
8989ProtectionofConfidentialRightsandKnowHow,1968A.B.A.Sec.Pat.Trademark&CopyrightL.CommitteeRep.107,at68
(reportofLeonardB.Mackey,Chairman).

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D.TheInitialWorkofNCCUSLandCommittee402ofthePTC
Asnotedabove,onewaythatthepracticingbarsoughttosolvetheErie/Sears/Compcosqueezewasthroughtheadoptionof
the Uniform Deceptive Trade Practices Act. 92 According to a 1962 report by the Unfair Competition Committee of
NCCUSL,althoughitwasrecognizedthattherewereseveralformsofunfaircompetition,forpurposesoftheadoptionof
uniformlawsitwasdeterminedthatthelawofunfaircompetitionshouldbedividedintothefollowingtwogeneralareas:
(1)AnActdealingwithfalse,confusingordeceptivetradeidentificationandfalse,confusingordeceptiverepresentationsas
tothesourceororiginofgoods;[and]
(2)AnActdealingwithtradesecretsandconfidentialdisclosures.93
However,nothinghappenedatNCCUSLwithrespecttoauniformtradesecretsactbetween1962andlate1968.The1968
resolutionbythePTCinsupportofauniformtradesecretsact,togetherwithexpressionsofsupportfromotherinterested
parties,providedtheimpetusforresurrectingtheproject..94
TheresurrecteduniformtradesecretsactprojectbeganwiththeformationwithinNCCUSLofa"SpecialCommitteeon
UniformTradeSecretsProtectionAct"(hereinaftertheSpecialCommittee),chairedbyCommissionerJosephMcKeown,
andthepreparationofareportbyProfessorRichardF.Dole,Jr.,oftheUniversityofIowa,onthecurrentstate [*512]of
tradesecretlaw. 95 Atthattime,ProfessorDolewasthecochairofCommittee402ofthePTC.In1969,hewasalso
appointedbytheGovernorofIowatoserveasaCommissionerofNCCUSL,therebyallowinghimtobedirectlyinvolved
withtheUTSAdraftingprocess.
Theprocessofdraftingaproposeduniformtradesecretsactbeganin1970withthepreparationofthe"FirstTentativeDraft,
SecondWorkingDraft."Atthesametime,andconsistentwiththehistoricalrelationshipbetweenNCCUSLandtheABA,a
liaisonwasestablishedbetweentheSpecialCommitteeandCommittee402ofthePTC.Thisenabledinputtobeobtained
fromthepracticingintellectualpropertybarattheverybeginningofthedraftingprocess.Becauseheworemultiplehats
(NCCUSLCommissioner,memberofCommittee402ofthePTC,andmemberoftheSpecialCommittee),ProfessorDole
becametheconduitthroughwhichmuchofthecorrespondenceandthinkingregardingauniformtradesecretsactflowed.
From1970untilAugust1979whentheUTSAwasfinallyadopted,theproposedUTSAwentthroughmanyiterationsand
refinements,withdifferentconstellationsofinterestedpersonsexpressingviewsononeormoretopics.Forinstance,between
1971and1972,thePTCSectiondiscussedandadoptedatotalofsevenresolutionsfavoringauniformtradesecretsact. 96In
August1972,attheAnnualMeetingofNCCUSLheldinSanFrancisco,theproposedUTSA(intheformoftheSeventh
WorkingDraft)receiveditsfirstreading.97

9090Resolution14,1968A.B.A.Sec.Pat.Trademark&CopyrightL.CommitteeRep.95(EdwardC.Vandenburgh,ed.).Cf.

RelationshipbetweenAmericanBarAssociationandNationalConferenceofCommissionersofUniformStateLaws(explainingthatthe
NCCUSLwascreatedin1892upontherecommendationoftheABA);InstructionsforABAAdvisorstoDraftingCommitteesofthe
NationalConferenceofCommissionersonUniformStateLaws(February1,1979)(demonstratingthatthebylawsofNCCUSL
specificallyrequirethatitnotifyandconsultwiththeappropriatecommitteeorsectionoftheABA);NCCUSLDraftingCommitteeStatus
Report(19781979)(demonstratingthatatthetimeoftheadoptionoftheUTSAin1979,EdwardT.McCabewastheABAliaisontothe
NCCUSLDraftingCommitteeonUniformTradeSecrets).

9191TradeSecrets,InterferencewithContractsandRelatedMatters,1969A.B.A.Sec.Pat.Trademark&CopyrightL.CommitteeRep.
402,at236(reportofJamesW.Geriak,Chairman).

9292Seesupranotes6364andaccompanyingtext.
9393LetterfromFrancesD.Jones,ExecutiveSecretaryofNCCUSL,toG.M.Fuller,Esq.(December7,1966).
9494See,e.g.,LetterfromtheAmericanChemicalSocietytoAllisonDunhamofNCCUSL(April13,1969).
9595LetterfromAllisonDunham,ExecutiveDirectorofNCCUSL,toAlbertF.James,Jr.(July30,1969)("ProfessorRichardDoleofthe
UniversityofIowapreparedastudyreportforthiscommitteewhichhasjustbeencirculatedtothechairmanofthecommittee....The
reporter,RichardDole,hasjustbeenmadeaCommissionerfromIowawhichmaypresentsomeawkwardnessinhisbeingreporterfor
anotherCommissioner.").

9696SeeTradeSecrets,InterferencewithContracts,andRelatedMatters,1973A.B.A.Sec.Pat.,Trademark&CopyrightL.Committee

Rep.402,at179(reportofHenryE.Otto,Jr.,Chairman,Subcomm.C)[hereinafterTradeSecrets1973,Subcomm.CReport](attaching
"RevisedDraft(3/5/73)oftheProposedUniformTradeSecretsActProposedbySubcommitteeCoftheABAPatentSectionCommittee
402").
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According toa verbatim transcript of the first reading ofthe UTSA, thefocus ofthe NCCUSL Commissioners' early
discussionswasonfourbroadpolicyquestions. 98First,afternotingthattradesecretsareprotectedbothbyprinciplesoftort
andcontractlaw,thequestionwasraisedwhethertheUTSAshouldbelimitedtodealingwithtorttheoriesofliability. 99
Next,inputwassoughtontheextenttowhichtheUTSAshoulddealwithliabilityarisingfromconfidentialrelationships,
particularlytotheextentthatsuch [*513]relationshipsdonotinvolvetradesecrets. 100Thethirdpolicyquestionconcerned
thelevelofintentorknowledgethatshouldberequiredtoimposeliabilityundertheUTSA,particularlywithrespecttoa
personwhoobtainedinformationingoodfaithwithoutknowledgeofmisappropriation. 101Thefinalpolicyissueconcerned
thescopeandlengthofinjunctiverelief,specifically:"[T]owhatextentshouldthepersonwhostole[secretinformation]
beforeitbecamewidelyknownbesubjecttosanctionsafterthesecretbecomeswidelyknown?" 102IntheSeventhWorking
DraftandtheUTSAasadopted,itwasdecidedtofocusontorttheoriesandleavecontracttheoriesseparate,nottoinclude
provisionsthatwouldimposeliabilitybaseduponconfidentialrelationshipsthatdonotinvolvetradesecrets,andtolimitthe
circumstancesunderwhichathirdpartycouldbeheldliableforobtainingandsubsequentlyusingordisclosinginformation
thatwasacquiredingoodfaith.103
Aquestionwasalsoraisedwhetherauniformlawwasneededatall.AsaNCCUSLCommissionerexplained:"AnytimeI
approachaproposalforlegislation,myfirstquestionis:Whichisbetterinthisarea,thecommonlawprocessorlegislation?"
104
Theanswertothequestion"whyauniformlawinsteadofcommonlaw"helpsexplainnotonlythepurposeoftheUTSA,
butitsmeaningandimport.ProfessorDolerespondedthathethoughttheUTSAcouldresolveanumberofabusesthatwere
occurringunderthecommonlaw,andwhathereferredtoas"thepreemptionproblem." 105Onecitedabusewasthepractice
insomecourtsofgrantingperpetualinjunctions.Anotherconcernedthefailureofsomecourtstorequiretheidentificationof
information claimed to be a trade secret, particularly in an injunctive order. Professor Dole also noted inconsistencies
concerningtheavailabilityofmonetarydamagesandhowtheyaremeasured.Afterstudyingthestateoftradesecretlawcirca
1973,Committee402ofthePTCconcludedthat"auniformactwouldbedesirabletoprovideconsistencyofdefinitionof
tradesecretmisappropriationandofthereliefanddefensesavailable,aswellasauniformstatuteoflimitations." 106
[*514]
AlthoughtheprecisedetailsofallofthecommentaryandconcernsabouttheUTSAwasnotrecorded,areviewofthevarious
draftsoftheUTSAandtherecordofrelevantPTCandNCCUSLproceedingsrevealsthat,beyondthegeneraldesirefor
uniformity,theprincipalissuesofconcerntoboththepracticingIPbarandthedraftersoftheUTSAwere:1.Thedefinition
ofatradesecret;2.Themeaningofmisappropriation;3.Theavailabilityandscopeofinjunctiverelief;4.Thenatureand
extentofmonetaryrelief,includingpunitivedamagesandattorney'sfees;5.Thetreatmentoftradesecretsduringlitigation;
and6.TheeffectoftheUTSAonotherprinciplesoflaw.Significantly,althoughthecommentarytotheRestatementFirst
addressedmanyofthesesameissues,itwasdeemedimportantfortheUTSAtoprovideclearerandmorepredictableresults
bysubstitutingtheRestatementFirst'sguidepostswithcodifiedrules.
E.TheGhostofSears/Compco:KewaneeOilCo.v.BicronCorp.

9797TranscriptofProceedingsoftheNationalConferenceofCommissionersofUniformStateLaws,AnnualConferenceinits81stYear,
UniformTradeSecretsProtectionAct,TheStanfordCourt,SanFrancisco,California(August411,1972)[hereinafterTranscriptof
Proceedings,81stYear,UniformTradeSecrets].

9898Id.
9999Id.at9.
100100Id.at18.
101101Id.at19;seeRichardF.Dole,TheUniformTradeSecretsActTrendsandProspects,33HamlineL.Rev.409(2010).Compare
ConmarProds.Corp.v.UniversalSlideFastenerCo.,172F.2d150(2d.Cir.1949),withShellmarProds.Co.v.AllenQualleyCo.,87F.
2d104(7thCir.1936)(demonstratingtheconflictingapproachestotheissue).

102102TranscriptofProceedings,81stYear,UniformTradeSecrets,supranote97,at22(notingthatbecausebroadsanctionscouldbe
anticompetitive,itwasproposedthatremediesbelimitedtoasocalled"leadtimeinjunction").

103103SeegenerallyUnif.TradeSecretsAct(1979).
104104Id.at31,seealsoTradeSecrets1973,Subcomm.CReport,supranote96(posingthequestion"whetheritmightbepreferableto
relyoncommonlawratherthanuponastatutorysolutionincasesinvolvingmisappropriation").

105105TranscriptofProceedings,81stYear,UniformTradeSecrets,supranote97,at32;seealsoinfraPartII.E(explainingthatthe"pre
emptionproblem"referstotheimplicationsoftheSears/Compcodecisionsonstatetradesecretlaw).

106106TradeSecrets1973,supranote71,at179.
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FollowingthefirstreadingoftheproposedUTSAinAugustof1972,workontheprojectcontinuedbothatNCCUSLandthe
ABA,withCommittee402ofthePTCandProfessorDolepreparingreviseddraftsoftheUTSAthatweresenttotheSpecial
Committeeforconsiderationinmid1973. 107Atthattime,itwashopedthatafinalversionoftheproposedUTSAcouldbe
presentedtotheNCCUSLCommissionersforadoptionattheirannualmeetinginAugust1974.Withthedecisionofthe
SixthCircuitCourtofAppealsinKewaneeOilCo.v.BicronCorp. 108InMay1973,however,theentireprojectwasputon
holdduetodoubtsabouttheabilityofstatestolegislateintheareaoftradesecretlaw. 109
TheSixthCircuit'sdecisioninKewaneewasthethirdinaseriesofpostSears/Compcocasesthatcreateddoubtaboutthe
continuedviabilityofclaimsfortradesecretmisappropriationbaseduponstatelaw. 110 ThefirstwastheU.S.Supreme
Court's 1969 decision in Lear, Inc. v. Adkins, in which the Court overturned the wellestablished doctrine of licensee
estoppelandheldthatpatentlicenseescouldchallengethevalidityofpatentsthatwerethe [*515]subjectoftheirlicenses.
111
ThesecondcasewasthedecisioninPainton&Company,Ltd.v.Bourns,Inc.,inwhichaDistrictCourtrefusedtoenforce
thetradesecretprovisionsofamanufacturingagreement,findingaconflictwithpatentpolicy. 112WhentheDistrictCourt's
decisioninPaintonwasoverruledbytheSecondCircuitCourtofAppealsin1971,thepracticingbarbreathedasighof
relief.113Forovertwoyearsthereafter,itwasassumedthattradesecretlawcouldcoexistwithpatentlaw.Thatassumption
changedwhentheSixthCircuitCourtofAppealsrendereditsdecisioninKewanee.
AlthoughthetrialcourtinKewaneehadrefusedtofindthattradesecretlawwaspreemptedbypatentlaw,theCourtof
Appealsreversedand,insodoing,explicitlyrejectedthereasoningoftheSecondCircuitCourtofAppealsinPainton. 114
BecausetheCourtfoundthatthesubjectinformationwaspatentable,itheldthattheenforcementoftradesecretlawswith
respecttosuchinformationwouldundulyconflictwiththepatentpoliciesoftheUnitedStates. 115Inthisway,theCourt
effectivelylimitedtheperiodoftimeinwhichtradesecretlicensescouldbeenforcedtotheperiodendingoneyearafterthe
tradesecretswerefirstdisclosedtoalicenseethatis,theperiodoftimethatpatentlawallowsforthefilingofatimelypatent
applicationafterthefirstpublicuseorsaleofaninvention.116
WiththeconflictingdecisionsandreasoningoftheCircuitCourtsinKewaneeandPainton,thecircumstanceswereripefor
theU.S.SupremeCourttodecidewhetherstatetradesecretlawwaspreemptedbyfederalpatentlaw.AlthoughtheSupreme
Court's1974decisioninKewaneeisoftencitedforthepropositionthatstatetradesecretlawisnotpreemptedbyU.S.patent
law,itismoreaccuratetorecognizethatonlythenarrowversionoftradesecretlawdescribedinthatcaseisnotpreempted.
117
Becausetherewasgreat fearamongthebusinesscommunityandthepracticingbarthat tradesecret lawwouldbe
preemptedbyfederallaw,theappellantsinKewaneeandmanyamicirepeatedlyemphasizedthelimitedscopeoftradesecret

107107LettertoWilliamH.Adams,IIIfromJosephMcKeown(April13,1973);TradeSecrets1973,Subcomm.CReport,supranote96;
LettertoSpecialCommitteeMembersfromJosephMcKeown(July5,1973)).

108108KewaneeOilCo.v.BicronCorp.,478F.2d1074(6thCir.1973).
109109TradeSecrets1973,Subcomm.CReport,supranote96,at179("ThefutureofoureffortsandthoseoftheNationalConference

withrespecttothepromulgationandadoptionoftheUniformTradeSecretsActwillremainindoubtunlessanduntiltheCongressenacts
legislationnegatinganyfederalintenttopreemptstatecausesofactionforunfaircompetition.").SeealsoTradeSecrets1974,supranote
71,at252(notingthatnoactivitywastakenwithrespecttotheUTSApendingtheoutcomeoftheKewaneecase).

110110SeeRogerM.Milgrim,SearstoLeartoPainton:OfWhalesandOtherMatter,46N.Y.U.L.Rev.17(1971);JosephP.Zammit,
TheGhostofSearsCompcoIsFinallyLaidtoRest(OrisIt?),3HofstraL.Rev.37(1975).

111111Lear,Inc.v.Adkins,395U.S.653(1969).
112112Painton&Co.,Ltd.v.Bourns,Inc.,309F.Supp.271(S.D.N.Y.1970).
113113Painton&Co.,Ltd.v.Bourns,Inc.,442F.2d.216,221(2dCir.1971).
114114KewaneeOilv.BicronCorp.,478F.2d.1074,108687(6thCir.1972)(citingServoCorp.ofAm.v.GeneralElec.Co.,337F.2d
716(4thCir.1964);WaterServs.,Inc.v.TescoChems.,Inc.,410F.2d163(5thCir.1969);Painton&Co.Ltd.v.Bourns,Inc.,442F.2d
216(2ndCir.1971))("WerecognizethatourholdinginthiscaseisinconflictwiththepreviouslyciteddecisionsofotherCircuits...but
ouranalysisoftherelationshipbetweenthePatentLawsoftheUnitedStatesandtheTradeSecretLawsoftheStateofOhio,asappliedin
thiscase,forcesustotheconclusionthatthefieldofprotectionaffordedtothisplaintiffbythatTradeSecretLawhasbeenpreemptedby
thePatentLawsoftheUnitedStates.")(emphasisadded).

115115Id.at1079.
116116See35U.S.C.102(b).
117117SharonK.Sandeen,KewaneeRevisited:ReturningtoFirstPrinciplesofIntellectualPropertyLawtoDeterminetheIssueof
FederalPreemption,12Marq.Intell.Prop.L.Rev.301,33353(2008).

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lawunderOhiocommonlaw.Forinstance,intheamicuscuriaebriefofthe [*516]AmericanBarAssociationfiledatthe
urgingofthePTCitwasargued:
ThetradesecretlawofOhio,andthatofallotherstates,providesatypeofprotectionforthesesecretswhichisdistinctly
differentfromthemonopolyobtainedunderthepatentlaws....[T]heownerofatradesecretonlyhas(1)therighttoprevent
thosewhohavestolenthesecretfromhimfromdisclosingorusingit,and(2)therighttopreventothersfromdisclosingor
usingitinbreachofcontractorbyviolationofafiduciaryrelationship.Itisimpossible,forexample,fortheownerofsucha
tradesecrettoassertany"tradesecret"rightagainstanypersonwhoindependentlydevelopsthesamesecret. 118
Thestrategyofemphasizingthelimitedscopeoftradesecretprotectionpaidoff.InrulingthatOhio'stradesecretlawdidnot
interferewithfederalpatentpolicies,theKewaneeCourtrepeatedlyreferencedsuchlimits.First,theCourtnotedthatfor
informationtobeprotectedbytradesecretlaw,itmustbesecretandnot"ofpublicknowledgeorofageneralknowledgein
thetradeorbusiness." 119 InkeepingwiththeargumentsoftheABA,italsorecognizedthatthereareonlytwotypesof
wrongsthattradesecretlawseekstoremedy:(1)thedisclosureoruseofatradesecretbyonewhois"undertheexpressor
impliedrestrictionofnondisclosureornonuse";and(2)thedisclosureoruseofatradesecretafterithasbeenobtainedby
"impropermeans,"includingtheft,wiretappingandaerialreconnaissance. 120Finally,theCourtemphasizedthattradesecret
protectionislimitedbythefactthatit"doesnotofferprotectionagainstdiscoverybyfairandhonestmeans,suchasbythe
independentinvention,accidentaldisclosure,orbysocalledreverseengineering."121
F.ResumptionandCompletionofUTSADraftingEfforts
AftertheSupremeCourt'sdecisioninKewanee,effortstocraftauniformtradesecretsactwereresumedinlate1975,firstat
theABAand [*517] lateratNCCUSL. 122 Interestingly,theCourt'searlierdecisioninthe1973caseofGoldsteinv.
CaliforniaapparentlypromptedfurtherexaminationofaquestionthatwasraisedduringthefirstreadingoftheUTSAin
1972specifically,whetherthedraftUTSAshould"bebroadenedtoincludemisappropriationofnonconfidentialintellectual
propertyaswellasmisappropriationoftradesecrets." 123Foranumberofreasons,itwasdecidedthatattentionshouldfocus
ontheadoptionoftheUTSAandnotonabroaderlawdesignedtoprotectbusinessinformationthatdoesnotmeetthe
definitionofatradesecret.ChairpersonRichardDolenoted:
[A]majorityofSubcommitteeAbelievesthatthisambitious[broadened]projectunnecessarilycoulddelaythepromulgation
ofuniformstatelegislationconcerningtradesecretprotectionwithrespecttowhichgreaterconsensusexists,couldconflict
withpresentcopyrightlaws,andmaynotbefeasibleinviewofpendingcopyrightrevisionlegislationwhichislikelyto
preemptexpresslycertainstateremedies.124

118118BriefAmicusCuriaoftheAmericanBarAssoc.,KewaneeOilCo.v.BicronCorp.,1973WL17240(Nov.20,1973)(No.73187)
(referringtowhatisnowthemisappropriationprongoftheUTSA);seeSummaryofProceedings:TradeSecretsandRelatedMatter,1973
A.B.A.Sec.Pat.Trademark&CopyrightL.CommitteeRep.402,at141(BeverlyA.Vandenburgh,ed.);MemorandumtoABABoard
ofGovernors,re:AmicusCuriaeBrief(July1973).

119119KewaneeOilCo.v.BicronCorp.,416U.S.470,475(1974)(citingB.F.GoodrichCo.v.Wohlgemuth,192N.E.2d99,104(Ohio
1963);NationalTubeCo.v.EasternTubeCo.,3OhioC.C.Dec.459,462(OhioC.C.1902)).

120120Id.at47576;comparepreKewaneeversionsofdraftUniformTradeSecretsAct,withUnif.TradeSecretsAct(1979)

(demonstratingthatthedraftersoftheUTSAhadthestatementfromKewaneeinmindwhentheyrenewedtheireffortstoadoptaUniform
TradeSecretsAct,asthedefinitionof"misappropriation"changedfromtheformativestagestoadetaileddefinition).

121121Kewanee,416U.S.at476.
122122LetterfromProfessorRichardDoletothePTC,Committee402(December31,1975);LetterfromDeanLindsayCowento

MembersoftheSpecialCommitteeontheUniformTradeSecretsProtectionAct(March19,1976)("LatelastsummertheSpecial
CommitteeonUniformTradeSecretsProtectionwasinasensereorganizedandwewerechargedwithmovingforwardonadraftfor
conferenceconsideration....Inthemeanwhile,DickDole,whoremainsamemberofourCommittee,hascontinuedhisveryactive
participationintheworkoftheABASectionofPatentTrademarkandCopyrightLaw,servingasChairpersonofSubcommitteeAof
Committee402.DickhasalsobeenappointedbytheABAasitsliaisonwithourCommittee.").

123123ProposedReportofRichardF.Dole,Jr.,Chairperson,SubcommitteeAofCommittee402ofthePTCSection,at4(February6,
1976);seealsoGoldsteinv.California,412U.S.546(1973)(holdingthatbecauseU.S.Copyrightlawdidnot(then)protectsound
recordings,Californiawasfreetoenactstatelawstoprotectsuchcontent).

124124ProposedReportofRichardF.Dole,Jr.,Chairperson,SubcommitteeAofCommittee402ofthePTCSection,at4(February6,
1976).

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Thus,thePTCencouragedNCCUSLtodirectitsattentiontothe"expeditiousrefinementandpromulgationofaUTSA,"
notingthatissuesstillremainedregardingthedefinitionsof"tradesecret"and"misappropriation,"andlegitimatedefenses.
125

Beginningin1976,updateddraftsoftheUTSAbegantocirculateamongmembersofthePTCandNCCUSL. 126InAugust
of1976,boththePTCandNCCUSLvotedtoproceedwiththecompletionofauniformtradesecretsact. 127Therefollowed
preparationandconsiderationofmultipleadditionaldraftsoftheUTSA,beginningwithaJuly31,1977drafttitled"First
TentativeDraft"andcontinuingthroughmorethansixiterations.InJuneof1978,theReviewCommitteeestablishedby
NCCUSLtoconsider [*518] thereadinessofthedraftUTSAdeterminedthatitwasreadyforafirstreadingbeforethe
CommitteeoftheWhole. 128 Thus,althoughadraftUTSAhadalreadyreceiveditsfirstreadingin1972,thenewand
improveddraftUTSA("theSixthTentativeDraft")receivedafirstreadingatNCCUSL'sannualmeetinginAugustof1978.
129

Thetranscriptofthe1978firstreadingrevealsthatallfourofthepolicyissuesthatwereraisedin1972hadbeenresolvedin
theinterveningsixyears.WithrespecttotheissueofwhethertheUTSAshouldbelimitedtodealingwithtorttheoriesof
liabilityoralsodealwithcontracttheories,itwasdecidedthattheUTSAshouldfocusontorttheories. 130Ontheissueof
whetherthe UTSAshoulddeal withconfidential relationships,it wasdecidedthat confidential relationships wereonly
relevantundertheUTSAtotheextenttheyinvolvetradesecretsthatis,whereabreachofaconfidentialityagreementisthe
basisforafindingofmisappropriation. 131Thethirdissueconcerningtheliability,ifany,ofapersonwhoacquirestrade
secretsinnocentlywasresolvedbyprovidingforlimitedreliefintheformofaninjunction,butonlyiftherewasnomaterial
changeinpositiononthepartoftheonewhoinnocentlyacquiredthetradesecrets. 132 Lastly,ontheissueofavailable
remediesintheeventofanactofmisappropriationfollowedbythetradesecretbecominggenerallyknown,itwasdecided
thataninjunctionshouldissueforatleastthelengthofdefendant'sleadtimeadvantage. 133
Thefocusofthe1978firstreadingthereafterturnedtothepurposeandmeaningofvariousprovisionsofthedraftAct. 134
Baseduponthecommentarythatwasreceivedduringthe1978reading,aSeventhTentativeDraft(includingnotesand
comments)oftheproposedActwaspreparedinMarch1979anddistributedtotheSpecialCommitteeandtheReview
Committee. 135Ultimately,althoughquestionswereraisedaboutanumberofprovisionsoftheproposedAct,thestatusof
theUTSAdraftingprocesswasdeemedsufficienttoproceedwiththepreparationofa"DraftforApproval" [*519]thatwas
presentedtoandapprovedbyNCCUSLatitsannualmeetinginAugust1979. 136TheAugust1979versionoftheUTSA,
therefore,representstheculminationofoverthirteenyearsofstudyandworkbyscoresofattorneysandpolicymakers.
IV.THEPURPOSEANDMEANINGOFTHEUTSA

125125Id.at6.
126126LetterofRichardF.Dole,Jr.toMembersofSubcommitteeAofthePTC(February6,1976).
127127ReportofDeanLindseyCowen,ChairmanoftheSpecialCommitteeofNCCUSL;LetterfromGeorgeG.KeelyofNCCUSLto
LindseyCowen(August20,1976).

128128LetterfromMauriceHartnett,IIItoJohnC.Deacon,ChairmanofNCCUSL(June13,1978).
129129TranscriptofProceedingsinCommitteeoftheWhole,UniformTradeSecretsProtectionAct(August3,1978)[hereinafter
TranscriptofProceedingsinCommitteeoftheWhole].

130130Id.at6.
131131Id.at6;TradeSecrets,InterferencewithContracts,andRelatedMatters,1976A.B.A.Sec.Pat.,Trademark&CopyrightL.

CommitteeRep.33,at4(reportofRichardF.Dole,Jr.,Chairperson,Comm.402,Subcomm.A)("AmajorityofSubcommitteeA[of
Committee402ofthePTC]recommendedthattheSectionencouragetheNationalConferencetodirectitsattentiontotheexpeditious
refinementandpromulgationofaUniformTradeSecretsActwhichleavestothecommonlawandotherstateandfederallegislationthe
actionabilityofmisappropriationofnonconfidentialintellectualproperty.").

132132TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at7.
133133Id.
134134SeeinfraPartIII.
135135LetterfromLindseyCowentoMembersoftheSpecialCommittee(March30,1979).
136136TranscriptofProceedingsinCommitteeoftheWhole,UniformTradeSecretsAct,NationalConferenceofCommissionersof
UniformStateLaws,SheratonHarborIslandHotel,SanDiego,California(August67,1979).

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AlthoughtheinitialimpetusbehindtheUTSAwasthedesiretosolvetheErie/Sears/Compcosqueeze,thepreparationofa
proposeduniformlawallowedthedraftingcommitteetoconsidervariouswaystoimprovetradesecretlawasdevelopedat
commonlaw.Ultimately,theUTSAenhancedortruncatedthecommonlawdevelopmentoftradesecretlawinatleastsix
ways:(1)itprovidedapreciseandlimiteddefinitionofatradesecret;(2)itexcludedprotectionforbusinessinformationnot
meetingthedefinitionofatradesecret;(3)itfocusedattentionontheneedofatradesecretclaimanttoproveboththe
existenceofatradesecretandoneormoreactsofmisappropriation;(4)itclarifiedtheavailabilityandscopeofremedies,
includinginjunctiverelief,punitivedamages,andattorneys'fees;(5)itrecognizedthevalueofprotectiveordersduringtrade
secretlitigation;and(6)itexplicitlypreemptedothercommonlawcausesofactiondesignedtoprovideremediesforthe
misuseofbusinessinformation.
A.TheDefinitionofaTradeSecret
Aprincipalareaofconcernrelatingtothepracticingbar'sdesireforuniformitywasthecommonlawdefinitionorlackofa
definitivedefinitionofatradesecret.137Ina1963articlepublishedinTheBusinessLawyer,MathiasCorreaexplained:
Atthethresholdofanydiscussionofthe"protection"oftradesecretsitseemsmostappropriatetodefinewhattheterm"trade
secret"actuallymeans.Thetermseemstoimplytheexistenceofsomesortofpropertyandsuggeststhatatradesecretought
tobedefinableassuch....Infact,however,thisisrarelythecase.138
WhentheUTSAdraftingprocessbeganin1966,theRestatement [*520]Firstdidnothaveadefinitionalprovision.Instead,
lawyers and judges were directed to consider a list of six nonexclusive factors to determine whether a given set of
informationwasdeservingofprotection. 139Somejurisdictionsheldthatnoonefactorwasdeterminativeandthatthesix
factorscouldbeconsideredornotasjudgessawfit,whileotherjurisdictionsrequiredsufficientproofofallsixfactors. 140
Thisledtoinconsistencyandunpredictabilityregardingtheprotectablestatusofinformation,bothfromtheperspectiveofan
informationownerwhowantedtoknowifheorsheownedtradesecrets,andfromanindividualwhoneededtoknowifheor
shecoulduseinformationinhisorherpossession.141
UndertheUTSA,theRestatementFirst'snonexclusive,amorphous,andoptionallistoftradesecretfactorsisreplacedby
threespecificandmandatoryrequirements. 142First,tobeprotectedasatradesecret,theinformationmustbesecretwhich,
intheparlanceoftheUTSA,meansnotgenerallyknownorreadilyascertainable.Second,theinformationmustderive
independenteconomicvaluefromnotbeinggenerallyknown.Third,theinformationmustbesubjecttoeffortsthatare
reasonableunderthecircumstancestomaintainitssecrecy.Significantly,althougheachofthethreerequirementsofatrade

137137See,e.g.,P.J.Whelan,TradeSecretsProblemsofAcquisition,1963Bus.Law.539,540(1963)("Onthequestionofwhatisa

secretorwhenisknowledgeasecret,thecourtsareindisagreement.Wealsofindasharpdifferencebetweenthevariousjurisdictionson
thequestionwhenasecretceasestobeasecretinthesensethatthereceiverisboundtoholditinconfidenceandnotuseitwithoutthe
permissionofthediscloser.").

138138MathiasCorrea,ProtectionofTradeSecrets,1963Bus.Law.531(1963)(notingthetendencyofcourtsintradesecretcasesto
focusonthewrongfulbehaviorofthedefendantsinsteadoftheexistenceornonexistenceofatradesecret).

139139Restatement(First)ofTorts,cmt.b(1934)("Somefactorstobeconsideredindeterminingwhethergiveninformationisone'strade

secret:are(1)theextenttowhichinformationisknownoutsideofhisbusiness;(2)theextenttowhichitisknownbyemployeesandother
involvedinhisbusiness;(3)theextentofmeasurestakenbyhimtoguardthesecrecyoftheinformation;(4)thevalueoftheinformationto
himandhiscompetitors;(5)theamountofeffortormoneyexpendedbyhimindevelopingtheinformation;(6)theeaseordifficultywith
whichtheinformationcouldbeproperlyacquiredorduplicated.").

140140CompareMetallurgicalIndus.,Inc.v.Fourtek,Inc.,790F.2d.1195,1201(5thCir.1986),andMinuteman,Inc.v.Alexander,434

N.W.2d773,778(Wis.1989)(holdingthat"althoughallsixelementsoftheRestatement'stestarenolongerrequired,theRestatement
requirementsstillprovidehelpfulguidanceindecidingwhethercertainmaterialsaretradesecretsunderournewdefinition"),and
ConsolidatedBrands,Inc.,v.Mondi,635F.Supp.152,156(E.D.N.Y.1986)(explainingthat"[t]heweightgiventoeachindividualfactor
will,ofcourse,varydependingonthecircumstancesofaparticularcase.However,thelastfactorwill,inalmostallinstances,bethemost
significantofthesix"),andInreBass,113S.W.3d735,740(Tex.2003)(holdingthat"thepartyclaimingatradesecretshouldnotbe
requiredtosatisfyallsixfactorsbecausetradesecretsdonotfitneatlyintoeachfactoreverytime.")withWalMartStores,Inc.v.P.O.
Mkt.,Inc.,66S.W.3d620,630(Ark.2002),andCarroon&BlackRutter&Roberts,Inc.v.Hosch,325N.W.2d883(Wis.1982),
supersededbyWis.Stat.134.90.

141141CompareCorrea,supranote138,at531(discussingthelawrelatingtotheprotectionoftradesecretsandlamentingtheabsenceof
aclearmeaningofatradesecret),withWhelan,supranote137,at539(discussing"problemsencounteredbyacompanyinseekingto
avoidsituationsfromwhichliabilitymightarisefromthewrongfuluseofthetradesecretsofanother").

142142Unif.TradeSecretsAct1(1985)(providingthedefinitionoftradesecret).
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secretincorporateconceptsfromtheRestatementFirst'slistofsixfactors(seeChartAbelow),theRestatementfactorthat
examinedtheinformationowner'sinvestmentinthecreationandcollectionoftheinformationisirrelevant,excepttothe
extentitrelatesto[*521]whethertheinformationisreadilyascertainable. 143Inotherwords,evidenceoftheinvestmentthat
wasmadetocreateinformationmayberelevanttoshowthattheinformationcannotbeeasilyrecreated,buttheother
requirementsoftradesecrecymuststillbemetnamely,theeconomicvalueandreasonableeffortsrequirements.
CHARTA:
SidebysidecomparisonoftheRestatementFirstfactorsandUTSArequirementsoftradesecrecy
[SEETABLEINORIGINAL]
Theforegoinglimitationonthevalueofatradesecretowner'sinvestmentinthecreationofinformationisconsistentwith
FeistPublications,Inc.v.RuralTelephoneServiceCo.,inwhichtheU.S.SupremeCourtexplicitlyrejectedthesweatofthe
browdoctrine. 144AstheFeistCourtexplained:"Itmayseemunfairthatmuchofthefruitofthecompiler'slabormaybe
usedbyotherswithoutcompensation....Thisresultisneitherunfairnorunfortunate.Itisthemeansbywhichcopyright
advancestheprogressofscienceandart."145Fromtheperspectiveoftradesecretlaw,themerefactthatsomeonewenttothe
time,trouble,andexpense[*522]togatherinformationoreventocreateitdoesnotmakeitaprotectabletradesecret.Under
theUTSA,informationthattooklittletimeandenergytocreate(e.g.,theproverbial"sparkofgenius")canbeprotectedto
thesameextentasinformationthatisderivedfromyearsofpainstakingresearch,butonlyifitsatisfiesthethreemandatory
requirementsoftheUTSA'sdefinitionofatradesecret,asfurtherexplainedinfra.146
1.TheRequirementofSecrecy
AsrecognizedrepeatedlyinSupremeCourtcases,stateunfaircompetitionlawscannotprotectmattersofpublicknowledge.
147
TheUTSAdefinitionofatradesecretgoesonestepfurtherbyemphasizingthatevenwheninformationisnotknownby
thegeneralpublicitcannotbeatradesecretifitisgenerallyknownwithinanindustry. 148 Thefactthataninformation
ownerexpendedalotoftime,money,andenergytocompileinformationintoacomprehensiveformcannottransform
informationthatisgenerallyknownintoatradesecret.Partsofthecompilationmaybeprotectedbycopyrightlaw,butto
establishtradesecretprotectionforinformation,theowneroftheinformationmustestablishthatitisnotgenerallyknownby
boththepublicandmembersoftherelevantindustry. 149 TheUTSAfurtherrequiresthattheinformationnotbereadily
ascertainablebypropermeans. 150Generally,whetherinformationisreadilyascertainabledependsuponhoweasyitisto
find the information without reference to the [*523] alleged trade secrets. 151 The comments to the UTSA explain:

143143SeegenerallyDole,TheUniformTradeSecretsAct,supranote101.
144144FeistPubl'ns,Inc.v.RuralTel.Serv.Co.,499U.S.340,352(1991).
145145Id.at34950.
146146Seeinfranotes147167andaccompanyingtext.
147147SeeBonitoBoats,Inc.v.ThunderCraftBoats,Inc.,489U.S.141,15657(1989)("[S]tatelawthatinterfereswiththeenjoymentof

[freetradeinpubliclyknown]...unpatenteddesignandutilitarianconceptions...contravenestheultimategoalof[patentlawof]public
disclosureandusethatisthecenterpieceoffederalpatentpolicy.");KewaneeOilCo.v.BicronCorp.,416U.S.470,481(1974)("[T]hat
whichisinthepublicdomaincannotberemovedtherefrombyactionoftheStates.");Lear,Inc.v.Adkins,395U.S.653,663,668(1969)
(notingthatthedoctrineofpatentlicenseeestoppelwascreated"beforetheShermanActmadeitclearthatthegrantofmonopolypowerto
apatentownerconstitutedalimitedexceptiontothegeneralfederalpolicyfavoringfreecompetition"andthat"federallawrequiresthatall
ideasingeneralcirculationbededicatedtothecommongoodunlesstheyareprotectedbyavalidpatent").

148148Unif.TradeSecretsAct1(4)(i)(1985)("Thelanguage"notbeinggenerallyknowntoandnotbeingreadilyascertainableby

propermeansbyotherpersons"doesnotrequirethatinformationbegenerallyknowntothepublicfortradesecretrightstobelost.Ifthe
principalpersonswhocanobtaineconomicbenefitfrom[the]informationareawareofit,thereisnotradesecret.").

149149SeeReneeBeautySalons,Inc.v.BloseVenable,652A.2d1345,1350(Pa.Super.Ct.1995)(findingthatacompilationof
customerdatawasnotatradesecret);DenTalEz,Inc.v.SiemensCapitalCorp.,566A.2d1214,1229(Pa.Super.Ct.1989)(findinga
compilationofinformationidentifyingrailcarpartssupplierswasnotatradesecret).

150150Unif.TradeSecretsAct1(4)(i));seealsoDicksv.Jensen,768A.2d1279,1283(Vt.2001)(discussingthecircumstancesunder
whichcustomerlistsmaybereadilyascertainableandnoting,"thethresholdamountoftimeandmoneythatmustbeinvestedbeforea
customerlistisaccordedstatutoryprotectionvariesconsiderably").

151151SeeShorterOxfordEnglishDictionary2479(5thed.,OxfordU.Press2002)(defining"readily"as"withoutdelay"or"without

difficulty");id.at127(defining"ascertainable"ascapableofbeingdeterminedorlearned).Id.at127.SeealsoHamerHoldingGroup,Inc.
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"Informationisreadilyascertainableifitisavailableintradejournals,referencebooks,orpublishedmaterials." 152Also,if
the alleged secrets can be easily gleaned from products that are on the market through reverse engineering or simple
observation,theyarereadilyascertainable. 153Inthisregard,evidenceof"reverseengineering"mayprovideadefensetoa
claimoftradesecretmisappropriationintwoways:(1)byestablishingthattheinformationisreadilyascertainableand,
therefore,notatradesecret;and(2)byestablishingthattheinformationwasacquiredproperlyand,therefore,thattherewas
nomisappropriation.
2.TheEconomicValueRequirement
Establishingthatinformationisactuallysecret(thatis,notgenerallyknownorreadilyascertainable)isonlythefirststepin
provingtheexistenceofaprotectabletradesecretundertheUTSA.Thenextsteprequiresashowingthattheinformationhas
commercialvalueduetoitssecrecy.IntheparlanceoftheUTSA,theinformationmust"deriveindependenteconomicvalue,
actualorpotential,fromnotbeinggenerallyknownorreadilyascertainablebyotherpersonswhocanobtaineconomicvalue
fromitsdisclosureoruse."154Thus,theissueisnotwhethertheassertedtradesecretshavevalueintheabstract,butwhether
theyhavevaluebecausetheyaresecret,andsuchsecrecymakesthemvaluabletoothers.ProfessorDoleexplainedthis
conceptasfollows:"Alotofmailinglistsarenottradesecrets.Theyaren'timportantenough.Theymaybestamped'secret,'
buttheymaynotbesufficienttoconferacompetitiveadvantageandwouldnotqualifyastradesecretsunderouract." 155
[*524]
TheeconomicvaluerequirementoftheUTSAwasnotsimplyadefinitionalflourishbutwasspecificallydesignedtoincrease
the plaintiff's burden of proof in order to ensure that a claim for relief was not provided for illusory information or
informationoflittleimport. 156 ThefirstdraftoftheUTSApreparedbythePTCcontainedatangibilityrequirementthat
wouldhaverequiredtradesecretplaintiffstoprovethattheirtradesecretshadbeenfixedinsometangibleform. 157 The
purposeofatangibilityrequirementwasexplainedasfollows:
Yougetintothesecases,andtheplaintifftriestogetstrongreliefanddiscloseaslittleofwhathisrealsecretisashecan;and
theideaisthattradesecretprotectionshouldnotbeavailableunless,priortomisappropriation,theplaintiffhasprovidedan
evidentiaryembodimentofthatwhichheseeksprotectionfor.158
Afteritwaspointedoutthatsometimestheworstwaytoprotectasecretistowriteitdown(aswasthecasewiththe
PentagonPapersthatweretheninthenews),thedecisionwasmadetodeletethetangibilityrequirement. 159Later,when
concern was raised that the absence of a tangibility requirement might create rights in inchoate ideas, Professor Dole
v.Elmore,560N.E.2d907,918(Ill.App.Ct.1990)("[T]hekeytosecrecy[undertheAct]istheeasewithwhichinformationcanbe
developedthroughotherpropermeans:iftheinformationcanbereadilyduplicatedwithoutinvolvingconsiderabletime,effortorexpense,
thenitisnotsecret.");VigoroIndus.,Inc.v.Crisp,82F.3d785,790(8thCir.1996)("Vigoro'stwohundredfarmstorecustomerscouldbe
easilydiscoveredbecausetheyfarminasmallgeographicarea.").

152152Unif.TradeSecretsAct1cmt.5.
153153Id.
154154Unif.TradeSecretsAct1(4)(i).SeealsoEricE.Johnson,TradeSecretSubjectMatter,33HamlineL.Rev.545(2010).
155155TranscriptofProceedingsoftheNationalConferenceofCommissionersonUniformStateLaws,TradeSecretsAct,8thSession,at

11(August5,1985)[hereinafterTranscriptofProceedings,8thSession,UniformTradeSecrets].SeealsoRogersCasey,Inc.v.Nankof,
No.02Civ.2599,2003WL1964049at*5(S.D.N.Y.April24,2003)(unpublished)(citingMetroTrafficControl,Inc.v.ShadowTraffic
Network,30U.S.P.Q.2d1684,1688(Cal.Ct.App.1995)(citingtheeconomicvaluerequirementasamajorimpedimenttoplaintiff's
claim,explainingthattheallegedtradesecretinformation"derivesitseconomicvaluenotfromitssecrecy,ifany,butratherfromits
relevancetotheneedsoftheparticularclient"));SpringIndus.,Inc.v.Nicolozakes,No.99AP120075,2000WL1751163at*2(OhioCt.
App.2000)(unpublished)(findingthattheallegedtradesecretinformationwasofnovaluetothedefendant);MontgomeryCntyAssn.of
Realtors,Inc.v.RealtyPhotoMasterCorp.,878F.Supp.804,814(D.Md.1995)(notingthatthedatabase"deriveseconomicvaluenot
fromitssecrecy,butfrombeingwidelydistributed....");Pooley,supranote8,at4.05.

156156Seesupranotes139142andaccompanyingtext.
157157SeeFirstTentativeDraft(SeventhWorkingDraft)ofUniformTradeSecretsAct,1(2)(July18,1972)("'[T]radesecret'meansa
scientific,technical,orcommercialideaorfactwhichisreducedtotangibleformwhichisundisclosedordisclosedsolelywithexpressor
impliedrestrictionsonitsdisclosureoruse,andwhichconfersanactualorpotentialcompetitiveadvantage.")(emphasisadded).

158158TranscriptofProceedings,8thSession,UniformTradeSecrets,supranote97,at5.
159159TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at6;seealsoNewYorkTimesCo.v.UnitedStates,403U.S.
713(1971).

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explained:"Wedidnotmeantograntprotectiontoabstractideasperiod.Anabstractideawouldn'thavecommercialvalue."
160
Inlieuofatangibilityrequirement,theUTSArequiresproofofcommercialvalueandreasonableeffortstomaintain
secrecy.
Asoriginallydrafted,theeconomicvaluerequirementusedtheterm"commercialvalue."Section1(4)oftheversionofthe
UTSAthatwasadoptedbyNCCUSLin1979reads:
(i)derivesindependent actualorpotential commercialvaluefrom notbeinggenerallyknownto,andnotbeingreadily
ascertainablebypropermeansby,otherpersonswhocanobtaineconomicvaluefromitscommercialuse.... 161
[*525]
TheReviewCommitteehadearlieragreedthat"commercialvalue"wasabetterconceptthan"economicvalue,"butboth
termswerestillused.162FollowingtheformaladoptionoftheUTSAinAugust1979,NCCUSL'sCommitteeonStyleasis
its purpose and practicereviewed the language of the UTSA for grammatical and style problems. Apparently noting
confusionorinartfulnessintheuseofboththeterms"commercial"and"economic,"theStyleCommitteechangedthe
foregoinglanguageasfollows:
(i) derives independent economic value, actual or potential, from not being generallyknown to,and not beingreadily
ascertainablebypropermeansby,otherpersonswhocanobtaineconomicvaluefromitsdisclosureoruse....
Apparently,theCommitteeonStyleviewedtheterms"commercial"and"economic"asbeingsynonymous.Inlightofthis
drafting history, the economic value requirement can be read to include a requirement that the alleged trade secret
informationbeofvaluetoothersduetoitsactualorpotentialcommercialuse.163
3.TheReasonableEffortsRequirement
ThethirdpartoftheUTSA'sdefinitionofatradesecretrequiresthattheputativetradesecretownerestablishthatthe
informationisandhasbeenthesubjectofeffortsthatarereasonableunderthecircumstancestoprotectitssecrecy. 164Thisis
consistentwithanumberofearlytradesecretcasesthatcarefullyexaminedtheextenttowhichtheclaimanttreatedthe
informationasasecret.165
DuringconsiderationoftheproposedUTSAin1978,thereasonableeffortsrequirementwascitedinresponsetoconcerns
thattheUTSAmightbeinterpretedtoimposeliabilityonsomeonewhoacquiredinformationasaresultofthetradesecret
owner'snegligence.166
Mr.Haydock:Mr.Chairman,Ihaveaquestionhere.Onpage2,line23,withreferencetoknowledgeofatradesecretthat's
acquiredbymistake,Iwouldbepleasedtohavealittlemoreindicationofwhatyoumeanby"mistake."
...
Mr.Dole:IthinkwewerethinkingoftheRestatement [*526]concept.Theirillustrationstypicallyinvolvedmisdelivered
memosandletters.Ifapersonisnegligentinmaintainingsecrecy,underthedefinitionof"tradesecret"iftheyarenegligent
enough,thatcanforfeit[their]protection.Soifthenegligencegoestoreasonablenessoftheeffortstomaintainsecrecy,you
canloseprotection.Butifyoujustmisdeliversomethingyouaretryingtokeepconfidential,youcanimposeliability. 167

160160Id.at10.
161161Unif.TradeSecretsAct,asadoptedinAugustof1979(emphasisadded).
162162LetterofDeanLindseyCowentoHenryE.Otto,Jr.(May8,1978).
163163AccordRelig.Tech.Ctr.v.Wollersheim,796F.2d.1076,1090(9thCir.1986)(holdingthatacommercialadvantagemustbe
shownandthattheallegedspiritualadvantagewasnotenough).

164164LetterofDeanLindseyCowentoHenryE.Otto,Jr.(May8,1978).Unif.TradeSecretsAct1(4)(1985).
165165Seesupranotes2533andaccompanyingtext(explainingthatearlytradesecretcasesmandatedtherebeaconfidentiality
agreementorsomeevidencethatplaintifftreatedtheinformationasasecret).

166166TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at23.
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ItisclearfromtheforegoingexchangethatthedraftersoftheUTSAdidnotintendtoprotectbusinessinformationmerely
becauseanindividualorcompanyhadhopedorintendedtokeepitsecret.Wishfulthinkingisnotenough.Rather,only
informationthatisactuallysubjecttoreasonablesecrecyeffortsmeetsthedefinitionofatradesecret.Whatis"reasonable"
accordingtotheUTSAdependsuponthecircumstancesandisoneareaundertheUTSAwherejudgesarefreetoexercise
theirtraditionalrolesanddevelopacommonlawmeaningofreasonableefforts.
B.EliminatingProtectionforMereBusinessInformation
BythetimeofthefirstreadingoftheSixthTentativeDraftinAugust1978,thethreerequirementsofatradesecrethad
emerged as the preferred way of defining a trade secret and there was little debate among NCCUSL Commissioners
concerningthedefinitionaswritten. 168 BecausethedraftersoftheUTSAhadthebenefitoftheU.S.SupremeCourt's
reasoninginKewanee,itmustbeassumedthattheywereawareofthenarrowscopeoftradesecretlawthatisdescribed
therein and that the UTSA was written in a manner that is consistent with those parameters. 169 Thus, although the
conventionalwisdomisthattheUTSAbroadenedthescopeofinformationthatisprotectableundertradesecretlawby
deletingtheRestatementFirst'srequirementsthattheprotectedinformationbenonephemeralandusedinone'sbusiness,it
reallyonlybroadenedtheclassesofinformationthat,theoretically,canbeprotected. 170Bysubstitutingthree [*527]clearly
articulatedtradesecrecyrequirementsforalistofindeterminatetradesecrecyfactors,theUTSAactuallyincreasedthe
burdenthatplaintiffsintradesecretcasesfacewhentryingtoestablishtheexistenceofatradesecret. 171Inthisway,the
UTSAwasdesignedtoreducetheincidenceswherecourtswouldprotectinformationwithoutsufficientproofofsecrecy.The
UTSAlimitedthescopeoftradesecret protectionevenfurtherbyrefusingtoextenditscoveragetomereconfidential
informationthat,under759oftheRestatementFirst,couldbeprotectediftheconfidentialinformationwasacquiredby
impropermeans"forthepurposeofadvancingarivalbusinessinterest."172
Asnotedabove,thequestionoftheproperscopeoftheUTSAandwhetheritshouldapplytoabroadersetofinformation
thantradesecretscontinuallyreappeared,likeabadpenny,asanissueduringthedraftingprocess. 173Eachtimetheissue
wasraised,thedecisionwasmadetofocustheUTSAonclaimsrelatedtoactualtradesecrets.Initially,thatchoicewas
simplyaquestionofpreference,butastheSupremeCourt'spreemptionjurisprudencedevelopedandCongressexpandedthe
reachofU.S.copyrightlaw,theissuebecameoneofsubstance.Apparently,theSupremeCourt'sdecisioninGoldsteinin
whichitrefusedtoholdthataCaliforniastatuteprotectingsoundrecordingswaspreemptedbypre1978copyrightlaw
suggestedtosomethatstatelawcouldbeusedtoprotectawidevarietyofinformationandintangiblepropertyrights. 174
Thispossibility,however,wasshortlivedgiventhesubsequentenactmentbyCongressoftheSoundRecordingActandthe
1976CopyrightActandtheU.S.SupremeCourt'sdecisioninFeist.175
Although301oftheCopyrightActtheprovisionthatdefinestheextenttowhichU.S.copyrightlawpreemptsstatelaw
suggests that some state causes of action related to the protection of business information are not preempted, the
identificationofthosecausesofactionbecamemorecomplicatedafter1976.ThedraftersoftheUTSAdidnotwanttodelay
enactmentofauniformtradesecretlawwhiletheyfiguredoutifandhowotherformsofbusinessinformationcouldbe

167167Id.at23.SeealsoUnif.TradeSecretsAct1,cmt.("Thetypeofaccidentormistakethatcanresultinamisappropriationunder
Section1(2)(ii)(C)involvesconductbyapersonseekingreliefthatdoesnotconstituteafailureofeffortsthatarereasonableunderthe
circumstancestomaintainitssecrecyunderSection1(4)(ii).").

168168SeegenerallyTranscriptofProceedingsinCommitteeoftheWhole,supranote129.
169169Seesupranote117andaccompanyingtext(explainingthatKewaneewasdecidedin1974);seealsosupranote122and
accompanyingtext(explainingthatthedraftersresumedworkontheUTSAaftertheSupremeCourt'sdecisioninKewanee).

170170Unif.TradeSecretsAct1,cmt(1985)("Thedefinitionof'tradesecret'containsareasonabledeparturefromtheRestatementof

Torts(First)whichrequiredthatatradesecretbe'continuouslyusedinone'sbusiness.'ThebroaderdefinitionintheproposedActextends
protectiontoaplaintiffwhohasnotyethadanopportunityoracquiredmeanstoputatradesecrettouse.");seealso,Milgrim&Benson
supranote20,1.02.

171171Unif.TradeSecretsAct1(4)(definitionof"tradesecret").
172172Restatement(First)ofTorts759(1934).
173173Seesupranotes123124,137138andaccompanyingtext.
174174Seesupranotes1223Error!Bookmarknotdefined.1234andError!Bookmarknotdefined.accompanyingtext.
175175SeeSoundRecordingActof1971,Pub.Law92140,85Stat.391(1971);Pub.Law93573,88Stat.1873(1974)(codifiedinthe

CopyrightActof1976,17U.S.C.102(1990)(amendingthisActandmakingitpermanent);CopyrightActof1976,Pub.L.No.94553,
90Stat.2541(1976)(codifiedasamendedinscatteredsectionsof17U.S.C.);supranote144andaccompanyingtext.
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protectedbystatelaw. 176Ifthe[*528]UTSAwastodealwithalltorttheoriesofliability,thePTCandNCCUSLwould
havehadtosortoutavarietyofcommonlawcausesofactionthat,inoneshapeoranother,previouslygavereliefforthe
misuseofbusinessinformation.Moreover,allowingforsuchclaimswithrespecttoinformationthatdoesnotmeetthe
UTSA'sdefinitionofatradesecretwoulddestroytheveryuniformityandconsistencythattheUTSAwasdesignedto
promote. Thus,it was decided that theUTSAshouldinclude aprovisiontoprecludealternativetortbased theoriesof
liability.Consistentwiththelanguageof301oftheCopyrightAct,whileitistheoreticallypossiblethatawrongcouldbe
articulatedthatprovidesthe"extraelement"necessarytoavoidcopyrightpreemption,7oftheUTSArequirestheextra
elementtobesomethingotherthantheclaimedwrongfulacquisition,disclosure,oruseofbusinessinformation. 177
C.TheDefinitionofMisappropriation
AsnotedbytheSupremeCourtinKewanee,oneofthereasonsthatthetradesecretlawofOhiowasnotpreemptedby
federalpatentlawwasbecausetheapplicabledefinitionofatradesecretdidnotincludeinformationthatwasalreadyinthe
publicdomain.178Anequallyimportantreasonwasthatproofoftheexistenceanduseofatradesecret,inandofitself,was
notsufficienttostateaclaimfortradesecretmisappropriationunderOhiolaw. 179Inaddition,itmustbeshowneither:(1)
thatthetradesecretinformationwasusedordisclosedinviolationofadutyofconfidentiality;or(2)thatthetradesecret
informationwasacquiredbyimpropermeans.180Inthisway,the"wrong"toberemediedisnotsimplythedefendant'suseof
trade secrets (as can be the case under patent and copyright law), but specific additional actionsdeemed toconstitute
cognizablewrongsinthenatureofactsofunfaircompetition.181
TheUTSA'srequirementthatboththeexistenceofatradesecretanditsmisappropriationbeproveninordertostatea
successfulclaimfortradesecretmisappropriationisconsistentwiththecommonlawdevelopmentoftradesecretlaw,which
generallyrequiredproofofabreachofdutyorbreachoftrust. 182Unfortunately,inthesamewaythatsomecourtsdidnot
always[*529]insistthataplaintiffinatradesecretcaseprovetheexistenceofatradesecrettherebyleadingtocallsfora
moreprecisedefinitionofatradesecretconcernswereraisedduringtheUTSAdraftingprocessaboutthefailureofsome
courtstorequireproofoftheexistenceofwrongdoing.Toremedythisproblem,thedraftersoftheUTSAdecidedtodefine
thewrongdoing("misappropriation")separatelyfroma"tradesecret,"therebymoreclearlyestablishingthattheexistenceof
atradesecretaloneisnotenough;thecommissionofawrongfulactmustalsobeshown.183
TheUTSA'sdefinitionofmisappropriationwasalsousedtospecifyclearlythecircumstancesunderwhichthirdpartieswho
arenotinprivitywithatradesecretownercanbeheldresponsiblefortradesecretmisappropriation.Whenthisissuewas
firstconsidered,thedraftersoftheUTSAhadthreeoptions.Ononeextreme,theycouldrefusetoimposeanyliabilityon
thirdparties.Ontheotherextreme,theycouldfollowthemodelofpatentandcopyrightlawandimposewhatis,inessence,a
formofstrictliability;thatis,theUTSAcouldhaveimposedliabilityforthemereacquisition,disclosure,oruseoftrade
secretswithoutrequiringitsmisappropriation.Theychoseanintermediateoptionandimposedliabilityonthirdpartiesonly
uponacquisitionofknowledgefollowedbyawrongfulact.Therearefourcircumstanceswherethismayoccur:
1.Whereathirdpartyacquiresatradesecretofanotherwithknowledge(orreasontoknow)thatthetradesecretwas
acquiredbyimpropermeans;184

176176See17U.S.C.301;seealsosupranote124andaccompanyingtext;Sandeen,KewaneeRevisited,supranote117,at33353

(explainingthatsincetherearenowtwocomprehensivebodiesoffederallawthatprovideprotectionforinformation(patentandcopyright
law),thereisagreaterlikelihoodthattheeffortsofcommonlawcourtsorstatelegislaturestoprotectbusinessinformationthatisnot
otherwiseprotectedbypatentorcopyrightlawwillconflictwiththefederalpoliciesunderlyingthoselaws).

177177AccordRestatement(Third)ofUnfairCompetition38(1995)(discussinglimitationsonclaimsforappropriatingtheother's

tangibletradevalues).SeealsoSharonK.Sandeen,AssessingtheProtectionofInformationthroughTortLawinIntellectualProperty
ProtectionofFactbasedWorks,CopyrightandItsAlternatives(EdwardElgar,RobertF.Brauneis,eds.2009).

178178Seesupranote119andaccompanyingtext.
179179Seesupranote120andaccompanyingtext.
180180Seesupranote120andaccompanyingtext.
181181Seesupranote120andaccompanyingtext;seealso35U.S.C.271(2003)(InfringementofPatent);17U.S.C.501(2002)
(InfringementofCopyright).

182182Seesupranotes2527andaccompanyingtext.
183183Unif.TradeSecretsAct1(2)(1985).
184184Id.1(2)(i).
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2.Whereathirdpartydisclosesorusesatradesecret ofanotherwithknowledge(orreasontoknow)that hisorher


knowledgeofthetradesecretwas:
a.derivedfromorthroughapersonwhoutilizedimpropermeanstoacquireit;185
b.derivedfromorthroughapersonwhoowedadutytothepersonseekingrelieftomaintainitssecrecyoflimititsuse; 186
or
c.beforeamaterialchangeofhisorherposition,kneworhadreasontoknowthatitwasatradesecretandthatknowledgeof
ithadbeenacquiredbyaccidentormistake.187
BecausethedraftersoftheUTSAdidnotwanttoimposeliabilityoninnocentusersofanother'stradesecrets,theywere
carefultorequireproofofspecificknowledgeorareasontoknow. 188Theyconsciouslychose,however,tomodifywhatwas
describedasthe"bonafidepurchaserfor [*530]value"rulebyenablingliabilitytobeimposedforactionsoccurringafter
adequatenoticeisgiven.AsexplainedbyProfessorDole,referringto2(d)oftheSixthTentativeDraft:
Thepresentlawisprettymuchabonafidepurchaserforvaluetypeofarrangement,andifapersoningoodfaithobtainsa
tradesecretandpaysvalueforit,andlaterfindsoutit'satradesecret,it'stoobadasfarastheoriginalholderofthetrade
secretisconcerned....Thisisanattempttotrytocreatesomeremedyforthesituationofthedisgruntledemployeewho
createsawindfallforthecompetitor.189
Ultimately,2(d)wasdeletedfromthedraftUTSAbutitsunderlyingconceptofpotentialliabilityafternoticewaspreserved
inUTSA1(2).Pursuantto1(2)(i),agoodfaithacquirercannotbeheldliableforthemereacquisitionoftradesecret
information.Hecanonlybeliableforthedisclosureanduseoftradesecretsif:(1)adequatenoticeisreceivedbeforethe
disclosureoruse;and(2)thetradesecretstatusoftheinformationwasnotlostinthemeantime. 190TheUTSAalsostatesa
preferenceforlimitingtheremediesthatcanbeawardedagainstsuch"goodfaithmisappropriators,"asdiscussedinfra. 191
D.Remedies
Duetothetraditionalseparationofcourtsoflawandequityandtraditionalnotionsofcompensableharm,plaintiffsinearly
unfaircompetitioncasesoftenfounditdifficulttoobtainremedies,eitherintheformofdamagesorinjunctiverelief.The
problemonthedamagesfrontwasthefrequentinabilityoftheplaintifftoproveactualdamagesbyshowingthat,butforthe
activitiesofthedefendant,plaintiff'sprofitswouldhaveincreased.Thiswasparticularlytruewherethedefendantwasnota
directcompetitorofthetradesecretowner.Withrespecttoarequestforinjunctiverelief,theprobleminearlycaseswas
oftenthenatureoftheclaimandthelimitedavailabilityofinjunctiverelief.Earlycourtsthatwantedtoawardinjunctive
reliefoftensolvedtheseproblemswithrespecttotradesecretclaimsbyeithercharacterizingthewrongasabreachof
confidentialityortrustorbycategorizingthetradesecretasapropertyright.192
Oneofthebenefitsoflegislativeenactmentsoverthecommonlawisthatfederalandstatelegislaturesarenotboundby
commonlawrules [*531] regardingremedies.Inenactinglawsthatestablishnewcausesofaction,legislatorsarefreeto
defineboththewrongdoingthatwillgiverisetoreliefandthescopeandnatureofavailablerelief.Oftenlegislatorschooseto
followcommonlawprinciplesthatdefinethecircumstancesforthegrantofvariousremedies,butwheretheybelievesuch

185185Id.1(2)(ii)(B)(I).
186186Id.1(2)(ii)(B)(III).
187187Id.1(2)(ii)(C).
188188TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at7.
189189Id.at40,2(d)("Althoughnototherwiseamisappropriator,ifnecessarytopreventamanifestinjustice,apersonwhoingood

faithhasderivedknowledgeofatradesecretfromamisappropriatorisliableforareasonableroyaltytotheextentofgainobtainedfrom
disclosuretoothersoruseofthetradesecretofanother.").

190190TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at31(notingtheriskoflossoftradesecretrightsdueto
widespreaddisseminationoftradesecretsfollowingtheirinitialmisappropriation).

191191Seeinfranotes192202andaccompanyingtext.
192192Seesupranote2527andaccompanyingtext.
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remediesareinadequate,theyarefreetodeviatefromcommonlawprinciples.Asnotedpreviously,thedesireforclearerand
betterremedieswasoneoftheprincipalmotivatingfactorsbehindtheUTSA.193
AtthetimethattheUTSAwasdrafted,thewillingnessoffederallegislatorstodeviatefromcommonlawnormswhenfixing
remediesforpatentandcopyrightinfringementwaswellknowntothepracticingbar. 194Infact,theremediesprovisionsof
theMcClellanBillweremodeledafterU.S.patentandcopyrightlaw. 195Thus,itisnotsurprisingthatthepracticingbarsaw
an opportunity to use the device of a uniform law to define the remedies that would be available for trade secret
misappropriation.196ThedraftersoftheUTSAfollowedthemodeloffederalpatentandcopyrightlawby:(1)providingfor
anawardofdamagesandbroadlydefininghowdamagescouldbemeasured;(2)specificallyprovidingforthegrantof
injunctiverelieftopreventeitheractualorthreatenedtradesecretmisappropriation;and(3)providingfortheawardof
punitivedamagesandattorneys'feesinspecialcases.197
Althoughitmayhavebeentemptingtodrafttheremediesprovisionstobenefittradesecretowners,thedraftersoftheUTSA
took a more balanced approach, recognizing that businesses might find themselves on either side of a trade secret
misappropriationclaim.Thisisseenmostclearlyinthelimitationsthatwereplacedontheawardofpunitivedamagesandin
therequirementsfortheawardofattorney'sfeesandinjunctiverelief. 198 Anawardofexemplarydamagesiscappedat
"twiceanyawardmadeundersubsection(a)"of3.Attorney'sfeescanonlybegrantedtotheprevailingpartyinthecaseof
badfaithpleadingorwillfulandmaliciousmisappropriation. 199Thebadfaithprovisionof4,inparticular,wascitedas"an
efforttochillwrongfulassertionofrightsundertheAct."200
[*532]
WhilecourtsaregivenbroadpowersundertheUTSAtograntinjunctivereliefagainstactualorthreatenedmisappropriation,
thedefinitionofmisappropriationwasdesignedtoensurethatinjunctionswouldnotbeimposedagainstgoodfaithacquirers
ofamisappropriatedtradesecret(thosewithoutknowledgeorareasontoknowofthemisappropriation). 201Further,for
thosegoodfaithacquirerswhomightbecomemisappropriatorsbecausetheyaretimelyinformedoftheallegedtradesecret
misappropriation,2(b)oftheUTSAstatesapreferenceforthepaymentofareasonableroyaltyinsteadofaprohibitory
injunction,and3(a)limitstheawardofmonetaryreliefinthecaseofamaterialandprejudicialchangeofposition. 202
E.TheTreatmentofTradeSecretsinLitigation
Sometimesstatutoryenactmentsarepreferredinordertodeviatefromcommonlawnorms,aswasthecasewiththeremedies
provisionsoftheUTSA.Othertimesstatutesareneededbecausethecommonlawisillequippedtodealwithauniqueissue.
Suchappearstobethecasewithrespectto5oftheUTSA,whichaddressesthetreatmentoftradesecretsinlitigationand
provedtobeanoncontroversialaspectoftheUTSA. 203Because,bydefinition,tradesecretsmustbekeptrelativelysecret
inordertobeprotectable,andcourtproceedingsaregenerallyopentothepublic,anytimeatradesecretownerinitiatesa
tradesecretmisappropriationclaimthereisariskthatthetradesecretswillbelostintheprocess.Toreducethisrisk,the

193193Seesupranotes62,106andaccompanyingtext.
194194See15U.S.C.281289;17U.S.C.502505.
195195Seesupranote82andaccompanyingtext.
196196TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at28(notingthatoneoftheproblemswiththeRestatement
Firstisthatitdoesnotdiscussremedies).

197197CompareUnif.TradeSecretAct,34(1985),withPatentAct,35U.S.C.283285,andCopyrightActof1976,17U.S.C.
502505.

198198TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at21(notingthattheUTSAwasdesignedtoeliminatethe

conceptofpermanentinjunctionandnoting"[s]otosomedegreetheActattemptstocreateabalance,andtosomedegreelimittheamount
ofprotectionthatisaffordedforatradesecret").

199199Unif.TradeSecretsAct4.
200200TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at29.
201201Seeinfranotes216233andaccompanyingtext(discussingthe1985AmendmentstotheUTSA).
202202SeeTranscriptofProceedingsinCommitteeoftheWhole,supranote129,at29;Unif.TradeSecretsAct3,cmt.;accordConmar
Prods.Corp.v.UniversalSlideFastenerCo.,172F.2d150(2dCir.1949).

203203Unif.TradeSecretsAct5,cmt.
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draftersoftheUTSAincludedaprovisionthatgivescourtsbroadpowerstopreservethesecrecyofallegedtradesecrets
duringlitigation,includingthepowertoissueprotectiveorders.
F.PreemptionofOtherTortTheoriesofLiability
InadditiontohavingtosolvethepreemptionproblemthatwasaddressedinKewanee,thedraftersoftheUTSAconfronted
anotherpreemptionproblem,orwhatismoreappropriatelylabeledanoverlappingcauseofactionproblem.Asnotedabove,
atthetimetheUTSAdraftingprocessbegan,tradesecretlawwasahodgepodgeoftheoriesandcausesofaction. 204In
ordertobringordertothischaos,theUTSAwasproposed.However,theUTSAwouldnotaccomplishitscentralmissionif
the(ofteninexactandincomplete)legaltheoriesandcausesofactionthatprecededitwereallowedtocoexist.Thus,what
ultimatelybecame7oftheUTSA[*533](EffectonOtherLaw)wasproposed.
As originally written, 7 (then 6) stated that the UTSA would be "the exclusive state tort remedy for trade secret
misappropriation,"butthatitspreclusiveeffectwouldnotapplyto:(1)criminalpenaltiesfortradesecretmisappropriation;
(2)tortliabilityformisappropriationthatisnotbasedupontheexistenceofatradesecret;and(3)contractualobligations. 205
Like5oftheUTSA,thisprovisionwasnoncontroversial.Whilequestionsaroseabouthowitshouldbeworded,therewas
nodisputeaboutthedesirabilityofsuchasectionoritsbasicintent.DuringthereadingofthedraftUTSAin1978,when
askedtoexplaintheconflictinglawthatwouldbeexcludedby6(a),ProfessorDolestated:
Well,Iwouldgatheritwouldbeatypeoflawthatimposesliabilityfortradesecretmisappropriationthathadadifferent
definitionor[sic]tradesecretoradifferentdefinitionofmisappropriation.Thebasiccategorieswouldbetortlaw,orquasi
contractlaw,thatimposedliabilityformisappropriatingsomethingthat'satradesecret. 206
Theproblemwiththelastsentenceoftheforegoingquoteisthatpreexistingtheoriesoftradesecretliabilitydidnotalways
useanadequatedefinitionofatradesecret,andwhatconstitutedmisappropriationwasnotnecessarilycoextensivewiththe
definitionsetforthintheUTSA. 207Itmakesmoresensetofollowthelogicofthefirstsentenceandrealizethatinlightof
complaints concerning the uneven commonlaw development and application oftrade secret law, 7 was intended to
precludeallotherstatebasedtortclaimsfortheprotectionof"proprietary"or"confidential"information.Otherwise,the
UTSA'sgoalofpreventingtheoverassertionoftradesecretrightscouldbeavoidedbythesimpleexpedientofclaimingan
independentrighttoprotectinformationthatdoesnotqualifyfortradesecretprotection.Asnotedabove,thisapproachwould
alsoconflictwiththepreemptionprovisionsofU.S.copyrightlaw.208
Section7oftheUTSAisperhapsbestunderstoodinlightofasimilarprovisionthatispartoftheUniformDeceptiveTrade
PracticesAct(UDTPA),whichwasadoptedbyNCCUSLin1966. 209Section2(c)oftheUDTPAprovides,"Thissection
doesnotaffectunfairtradepractices[*534]otherwiseactionableatcommonlaworunderotherstatutesofthisstate." 210
ThedraftersoftheUTSAcouldhavefollowedthelanguageoftheUDTPAandspecificallyallowedforthecontinued
commonlawdevelopmentoftheoriesofliabilityrelatedtobusinessinformationnotmeetingthedefinitionofatradesecret,
butchosenottodoso.211Instead,theystatedaclearintenttorestrictthefurtherdevelopmentofcommonlawtheoriesfor
theprotectionofbusinessinformation.Ifeithertheexistenceofatradesecretoranactofmisappropriation(asdefinedbythe
UTSA)cannotbeshown,thennotheoryofliability,otherthanonebaseduponbreachofcontract,isallowed.212

204204Seesupranotes43,82andaccompanyingtext.
205205UniformTradeSecretsProtectionAct,FirstTentativeDraft6,at56(July31,1977).
206206TranscriptofProceedingsinCommitteeoftheWhole,supranote129,at9.
207207SeealsoUniformTradeSecretsAct,SixthTentativeDraft(July28,1978)(thedraftwaschangedtoread:"ThisActdisplaces
conflictingcommonlawandstatutespertainingtoactionabletradesecretmisappropriation.").Seealso,JohnT.Cross,UTSA
DisplacementofOtherStateLawClaims,33HamlineL.Rev.445(2010).

208208Seesupranotes122124andaccompanyingtext.
209209RevisedUniformDeceptiveTradePracticesAct,ApprovedbytheNationalConferenceofCommissionersofUniformStateLawat
itsAnnualMeeting,Montreal,Canada(July30August5,1966).

210210Id.
211211ProfessorDolewasalsoinvolvedwiththedraftingoftheUDPAand,thus,waspresumablyawareofitsprovisionthatspecifically
allowedforthecontinuedcommonlawdevelopmentofunfairtradepracticeslaw.

212212AccordITTSchadowInc.v.Stein,7U.S.P.Q.1348(D.Minn.1988).Seealso,Restatement(Third)ofUnfairCompetition38,

cmt.a(1995)("Thelawofunfaircompetitionimposesliabilityonlyinconnectionwithparticularmethodsofcompetitionthatundermine
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Thepurposeof7oftheUTSAmustalsobeunderstoodinlightofthedevelopmentandapplicationoftheSears/Compco
doctrine.213Asdetailedsupra,whiletheKewaneeCourtheldthattradesecretlawwasnotpreemptedbyfederallaw,itdid
sobaseduponanarrowviewoftradesecretlawand,intheprocess,indicatedthatstatelawsthatattempttoprotectbusiness
informationthatisnotsecretorisnotmisappropriatedwouldfacepreemptionproblems. 214Section7isnotonlyconsistent
withKewanee,itisoneofthemeansbywhichtheUTSAsolved"thepreemptionproblem."215
G.TheHistoryofthe1985AmendmentstotheUTSA
GiventhelengthoftheUTSAdraftingprocessandthelongtermandextensiveinvolvementofthepracticingbarinthat
process,itisperhapssurprisingthatanyobjectionstotheActwouldbevoiced,letalonesosoonafteritsadoptionin1979.
AfterNCCUSLadoptedtheUTSAatitsannualmeetinginAugustof1979,anumberofstatesmovedquicklytoenactitinto
law.InAugust1980,MinnesotabecamethefirststatetopasslegislationadoptingtheUTSA,followedcloselybyIdaho,
Arkansas,Kansas,andLouisiana. 216Soonthereafter,however,theUTSAhitasnagintheformofoppositionengineeredby
WilliamLaFuze,anattorneyfromHoustonandan [*535] activememberoftheIntellectualPropertyLawSectionofthe
StateBarofTexas,thePTCSection,andtheAmericanPatentLawAssociation.217
OnJuly3,1981,theIntellectualPropertySectionoftheStateBarofTexas,attheapparenturgingofMr.LaFuze,passeda
seriesofresolutionsthat,whilefavoringauniformtradesecretsactinprinciple,opposedadoptionofthe1979versionofthe
UTSA. 218 DespiteitspastandextensiveinvolvementintheUTSAdraftingprocess,similarresolutionswerethereafter
adoptedbythePTConAugust8,1981. 219TheUnfairCompetitionCommitteeoftheAmericanPatentLawAssociation
followedsuitinaseriesofresolutionsthatwereputtoavoteinDecember1981. 220 Theprincipalconcernsofthethree
groupsrelatedtotheissueofremedies.
First,withrespectto7ofthe1979versionoftheUTSA,concernwasexpressedthatthelanguagedidnotmakeitclearthat
theUTSAwouldnotprecludebreachofcontractclaimsandassociatedcontractremedies.Second,althoughthepossibilityof
agrantofreasonableroyaltieswasmentionedintheinjunctionsectionofthe1979versionoftheUTSA(2),concernwas
expressedthatreasonableroyaltiesshouldalsobelistedasapossiblealternativemeasureofdamagesinthedamagessection
(3). 221 Third,concernwasexpressedabouttheremediesavailableagainstgoodfaithmisappropriators.AlthoughMr.
LaFuzeandhiscohortswantedtogivecourtstheflexibilitytograntdamagesmeasuredbyreasonableroyalties,theywanted
toallowsuchremediesagainstgoodfaithmisappropriatorsonlyin"exceptionalcircumstances." 222
Thefact thattheUTSAwasultimatelyamendedin1985isatestament tothevalueofpersistenceanddetermination.
AlthoughtheinitialresponseofNCCUSLwastosuggestthattherewerenoproblemswiththelanguageofthe1979version
oftheUTSAand,inanyevent,ithadbeenfullyvettedbythepracticingbar,Mr.LaFuzewouldnotrelentinhismissionto
amendtheUTSA.

ratherthanadvancethecompetitiveprocess....Theprimarysourceofprotectionforintangibletradevaluesarethefederalpatentand
copyrightlaws.").

213213Seesupranotes6567andaccompanyingtext(discussingtheSears/Compcodoctrine).
214214Seesupranotes117119andaccompanyingtext(discussingtheKewaneeholding).
215215Seesupranote105andaccompanyingtext.TheUTSAalsosolvedthepreemptionproblembynarrowlydefiningthescopeoftrade
secretprotection.

216216SeeMinn.Stat.Ann.325C.01.08(2010);IdahoCode48801807(2010);Ark.CodeAnn.475601607(2010);Kan.
Stat.Ann.6033203330(2010);La.Stat.Ann.Rev.Stat.51:14311439(2010).

217217Seeinfranotes223224,226227andaccompanyingtext(discussingrelevantcorrespondencefromMr.LaFuze).
218218ResolutionsoftheIntellectualPropertyLawSection,StateBarofTexas,regardingtheUniformTradeSecretsAct,approvedJuly
3,1981.

219219ResolutionsofthePatent,Trademark&CopyrightSection,AmericanBarAssociation,regardingtheUniformTradeSecretsAct,
approvedAugust8,1981.

220220SeeResolutionsoftheUnfairCompetitionCommitteeoftheAmericanPatentLawAssociation(November19,1981);Resolutions
oftheUnfairCompetitionCommitteeoftheAmericanPatentLawAssociation,regardingResultsofVoting(December7,1981).

221221ResolutionsoftheIntellectualPropertyLawSection,StateBarofTexas,regardingtheUniformTradeSecretsAct,ResolutionNo.
6(July3,1981).

222222Id.
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First,hecobbledtogetheranargumentthatthepracticingbarwasnotinfullsupportoftheUTSA,asevidencedbythe
aforementioned resolutions and a June 1979 critique of the draft UTSA by the Unfair Competition Committee of the
AmericanPatentLawAssociation.223Next,[*536]heinsistedonmeetingwithProfessorDoleandNCCUSLCommissioner
JamesShowers,bothresidentsofTexas,todiscussthematter. 224 ThatmeetingledProfessorDoletoprepareproposed
amendmentstotheUTSAin1982.225WhenNCCUSLwasnotquicktoamendtheUTSA,Mr.LaFuzeapparentlyconvinced
theUnfairCompetitionCommitteeoftheAmericanPatentLawAssociationtopursuefederaltradesecretlegislationand
usedthethreatofsuchlegislationtotrytoconvinceNCCUSLtoamendtheUTSA. 226Finally,whenthatstrategydidnot
work,Mr.LaFuzewrotetotheGovernorsofvariousstatestoinformthem,"theprimaryorganizedbarswhichfirstsupported
theadoptionoftheUniformTradeSecretsActbythestateshavewithdrawntheirsupport."227
AlthoughitwasanoverstatementforMr.LaFuzetoarguethatthemajorbarassociationswithdrewtheirsupportofthe
UTSAsincetheaforementionedresolutionswereonlyapprovedbyrelativelysmallcommitteesofsuchassociations,his
letterstotheGovernorswereapparentlythelaststrawthatcausedNCCUSLtoactuallyamendtheUTSA.Thefear,of
course,wasthatMr.LaFuzehadcreatedenoughsmokethatNCCUSL'seffortstoconvinceadditionalstatestoadoptthe
UTSAwouldbehampered.TherefollowedadditionalmeetingsanddiscussionsbetweenMr.LaFuzeandrepresentativesof
NCCUSLandthedevelopmentofseveralproposedamendmentstotheUTSA.228
Amendmentsto7weredesignedtomakeitclear(orclearer)thattheUTSAwasnotintendedtointerferewithclaimsfor
breachofcontractandassociatedcontractualremedies.Inthisregard,itwasfeltthatuseoftheword"remedy"wasbetter
thanuseoftheword"liability." 229Amendmentsto3wereproposedinordertomakeitexplicitthatreasonableroyalties
couldbeusedasanappropriatemeasureofdamagesundertheUTSAwhen"actualloss"and"unjustenrichment"couldnot
beproved. 230 Conversely,theamendmentsto2(b)weredesignedtolimittheuseofreasonableroyalties [*537] asan
alternativetothegrantofinjunctivereliefbystatingthattheycanonlybegrantedin"exceptionalcases." 231Proceedings
fromtheNCCUSLindicatethefollowing:
TheAmericanBarAssociationwasconcernedaboutlimitingdamagesin[casesofgoodfaithmisappropriation]andallowing
thecourtdiscretiontonotallowdamagesunderthosecircumstances.Andtheywantedtospellitoutsothatwhenyouhave
yourgoodfaithmisappropriation,damagesarenotsomethingtowhichtheplaintiffisautomaticallyentitled. 232
Significantly,because1(2)oftheUTSAwasunderstoodtoconferimmunityuponalargegroupofpotentialdefendants(so
called"goodfaithmisappropriators"),itwasdeemedunnecessarytodetailin2and3theextenttowhichequitableand
monetaryreliefshouldbelimitedbecauseofgoodfaithreliance.233
V. THE PRACTICAL AND LEGAL DIFFERENCE BETWEEN COMMON LAW DOCTRINES AND STATUTORY
ENACTMENTS

223223LetterofWilliamLaFuzetoJamesShowers(December5,1981);seealsoLetterofWilliamLaFuzetoProfessorRichardF.Dole
(March4,1982).

224224LetterofWilliamLaFuzetoJosephDeGrandi,PresidentofthePatent,Trademark&CopyrightSectionoftheAmericanBar
Association(January8,1982).

225225LetterofRichardF.DoletoJohnMcCabe(January13,1983)(referringtoproposedamendmentsthatwerepreparedinAugustof
1982).

226226LetterofWilliamLaFuzetoProfessorRichardF.Dole(December1,1982).
227227LetterofWilliamLaFuzetoOfficeroftheGovernoroftheStateofMontana(September19,1983).
228228LetterofRichardF.DoletoJohnMcCabe(February23,1984)(enclosingmemorandumregarding"DesirableAmendmentstothe
UniformTradeSecretsAct");MemorandumtoNCCUSLCommitteeonUniformTradeSecretActfromJohnMcCabe(June28,1984);
LetterofRichardF.DoletoJonMcCabe(June20,1984)(enclosingproposedamendmentasapprovedbyMr.LaFuzeinhispersonal
capacity).

229229AmendmentstoUniformTradeSecrets,PrincipalPolicyStatement,at12(July1985).
230230Id.at2(basedupontheholdinginUniversityComputingCo.v.LykesYoungstownCorp.504F.2d518,535(5thCir.1974));see
TranscriptofProceedings,8thSession,UniformTradeSecrets,supranote155,at1819.

231231AmendmentstoUniformTradeSecrets,PrincipalPolicyStatement,at23(July1985).
232232TranscriptofProceedings,8thSession,UniformTradeSecrets,supranote155,at25.
233233Id.at3;seeUnif.TradeSecretsAct1(2)(ii)(C)(1985)(demonstratingthatagoodfaithmisappropriatorisapersonwhodoesnot
knoworhavereasontoknowthattheinformationisatradesecretorthatitwasmisappropriated).

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OnceadoptedbyNCCUSL,uniformlawsmustbeenactedintolawbythelegislaturesofindividualstates.Becausethis
processtakestime,theswitchfrom theRestatement FirstviewoftradesecretstotheUTSAviewwasnotimmediate.
AlthoughfivestatesquicklyadoptedtheUTSAsothatitwentintoeffectinthosestatesin1981,itwasnotuntilSeptember
2,1988,whenAlaskabecamethetwentysixthstatetoenacttheUTSA,thattheUTSAreplacedtheRestatementFirstasthe
predominantbodyoflawgoverningtradesecretsintheUnitedStates. 234Unfortunately,littlenoticeofthismilestonewas
madebycourtsandcommentatorsofthetime,andmanyattorneysandjudgescontinuetorelyupontheRestatementFirst
versionoftradesecretlawasifitisgospel. 235Thisnotonlyresultsintheapplicationoftheincorrectbodyoflaw,butalso
givesunduecredittotheRestatementseriesthatis,atbest,onlysecondaryauthorityofapplicablelaw.Italsofailsto
recognizethattheRestatement(Second)ofTortsexcludedallsectionsconcerningunfaircompetitionandthatthetradesecret
provisionsoftheRestatementFirstweresubsequentlyreplacedin1998bysectionsofthe [*538] Restatement(Third)of
UnfairCompetition.236
TheRestatementserieswasandisanexplicationofapplicablelawasdivinedbymembersoftheAmericanLawInstitute
(ALI),consistingofacollectionofjudges,academics,andpractitioners. 237ThepurposeoftheRestatementwas(andis)not
tocodifythelaw,butrathertoclarifyandsimplifythelawbyprovidinganeasilyaccessibleandclearstatementofwhatthe
membersoftheALIthoughtwasthemajorityviewofthestatesonvariouspointsoflaw. 238 Asexplainedbyanearly
DirectoroftheALI:
AlthoughthemeaningofacaseandtheextentofitsauthoritywasoftenindisputetherulethattheRestatementshouldbe
preparedinlightofcaseauthorityhasbeenadheredto.TheRestatementdoesrepresenttheconsideredopinionofthose
constructingitofthewayinwhichthelawwouldbedecidedinthelightofdecisionsbythecourts. 239
Inmanyinstances,thedraftersoftheRestatementFirstdidnothavemuchtorelyuponintryingtopredicthowcourtswould
decidevariouslegalissues.AccordingtoastudyconductedbytheALIinthe1940s,"thepercentageofblanks[meaningthe
absenceofapplicablecaseauthority]runsinmanyStatesbetweenfiftyandseventyfourpercentandeveninStateslike
Massachusetts,NewYorkandPennsylvaniathereisasubstantialnumberofsectionsoftheRestatementnotcoveredbylocal
caselaw."240ThisundoubtedlyexplainswhysomeprovisionsoftheRestatementFirstseriesaremoredetailedthanothers.
Themorecommonlawthatexistedonasubject,themore"meat"thedraftershadtoworkwithintryingtoexplainthebetter
reasonedlaw.Wheretherewasnotmuchcaselawonatopicaswasthecasewithtradesecretlawcirca1939thenthe
provisionsoftheRestatementFirstonthosetopicsnecessarilyhadtobemoregeneralinordertoavoidcreatinglaw.
ThelackofapplicableauthorityandthegeneralityoftheRestatementFirstprovisionsontradesecretlawarerevealedby
boththestructureandcontentofthoseprovisions.Theprincipalimportof757through759oftheRestatementFirstisto
identifythenatureofthewrongdoing.Noeffortwasmadeinthoseprovisionstoprovidedetailsconcerningthemeaningof
anyterminologyusedtherein,letaloneapplicableremediesordefenses.Rather,suchdetailswerelefttobeworkedoutby
thecourtsofeachstateinaccordancewithcommonlawtradition.Ifandwhen [*539]sufficientcaseauthoritydevelopedon
suchissues,theRestatementFirstwouldberevisedandamendedtoreflectthesubsequentcommonlawdevelopmentofthe
law,asactuallyoccurredwiththeadoptionoftheRestatement(Third)ofUnfairCompetition. 241Moreover,althoughmany
provisionsoftheRestatementFirstincludedcommentary,thecommentarywasnotformallysanctionedbytheALIand,at

234234Seesupranote8andaccompanyingtext;seealsoAlaskaStat.45.50,91045(2010).
235235Seesupranote19andaccompanyingtext.
236236SeeRestatement(Second)ofTorts,DivisionNine,Intro.Note,at1(1979);Restatement(Third)ofUnfairCompetition3945
(1998).

237237WilliamDraperLewis,HistoryoftheAmericanLawInstituteandtheFirstRestatementoftheLaw,inRestatementintheCourts
(Permanented.,19321944).

238238Id.at19(explainingthatalthoughtheRestatementisexpressedintheformofacode"thereneverhasbeenanydesiretogivethem
statutoryauthority."Rather,"[theRestatement]isdesignedtohelppreservenottochangethecommonsystemofexpressinglawand
adaptingittochangingconditionsinachangingworld").

239239Id.at8.
240240Id.at20.
241241Id.at21("AnysubjectintheRestatementwhenpublishedrepresentsthepresentlaw.But,inashorttimeithereandthereceasesto
bethelaw.");seeRestatement(Third)ofUnfairCompetition3945.

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best,constitutestheindividualopinionoftheperson(s)whodraftedit. 242AswiththetextualprovisionsoftheRestatement
First,ifanissueoflawdevelopedinamannerthatwasinconsistentwiththecommentary,thenthelawasdevelopedshould
prevail.
IncontrasttotheRestatementseries,thepurposeoftheuniformlawprocessisnotmerelytorestateexistinglaw,buttomake
andcodifythelaw.AsnotedinahistoryofNCCUSL,in1837JusticeJosephStoryexplainedthepurposeandbenefitsof
uniformlawsthisway:
Onegreatadvantage,therefore,ofacode,anadvantagewhichinapracticalviewcanscarcelybeoverestimated,isthatit
supersedes the necessity,inordinarycasesat least,ofveryelaborate researchesintoother books; and indeed, it often
supersedesinallcases,butthoseofrareandextraordinaryoccurrence,thenecessityofconsultinganimmensemassof
learnedcollectionsanddigestsofantecedentdecisions.243
Thus,asabodyoflaw,theUTSAparticularlyascodifiedineachofthefortysevenjurisdictionsthathaveadoptedithasa
differentstatusthantheRestatementseries.WhereastheRestatementseriesissecondaryauthorityofwhatthelawis,the
UTSAisprimaryauthority.Asamatterofstatutoryinterpretation,therefore,thefirstplacethatcourtsinUTSAjurisdictions
shouldlooktounderstandtradesecretlawisthelanguageoftheUTSAitself.TotheextentthatthelanguageoftheUTSAis
unclear or incomplete, then various methods of statutory interpretation can be used in an attempt to apply the statute
correctly,oftendependingupontheinterpretativemodelpreferredbyagivenjudge.244
Whiledebateragesaboutwhether,andtowhatextent,itis [*540] appropriateforjudgestoconsultlegislativehistoryto
determinethemeaningofastatute,thedraftinghistoryoftheUTSAisasrelevant,ifnotmorerelevant,thantheRestatement
seriesforunderstandingthecurrentstateoftradesecretlaw. 245InthecaseofthetradesecretprovisionsoftheRestatement
First,thecasebycaseandfactspecificfindingsofvariouscommonlawcourtscirca1939isreplacedwitharecitationoflaw
thatwastheproductofyearsofstudyandwasupdatedtoreflectinterveninglegaldevelopments,particularlywithrespectsto
Sears/Compcoanditsprogeny.InthecaseofthetradesecretprovisionsoftheRestatement(Third)ofUnfairCompetition,
whichwerebasedupontheUTSA,thedraftinghistoryoftheUTSAprovidesmoredirectevidenceofthepurposeandintent
oftheUTSA.
AstheforegoinghistoryoftheUTSAreveals,theintentoftheUTSAwastosupplementthecommonlawinsomerespects
andchangeitinothers.Indeed,thisisoneofthereasonsthepracticingbaradvocatedfortheadoptionoftheUTSAinthe
firstplace.246Thepracticingbarwasnothappywiththepaceandpathofdevelopmentofthecommonlawoftradesecrets
anddecidedtospeedupandrefinethatprocessbyadoptingauniformlaw. 247Becausemanyofthetradesecretprinciples
thathadbeenfashionedbycommonlawcourtsdifferedfromstatetostate,thedraftersoftheUTSAendeavoredtoidentify
whattheyconsideredthebetterreasonedprinciplesoftradesecretlawsothattheycouldbecodifiedintheUTSA.Inthe
process,theyrejectedanumberofcommonlawprinciplesthatledtouncertaintyandlackofclarityorthatwouldhave
resultedinoverlybroadprotectionforbusinessinformation.Inparticular,inlightoftheU.S.SupremeCourt'sdecisionin
Kewanee,theUTSAwasdraftedtoensurethatthescopeofstatetradesecretlawwaslimitedsoasnottointerferewith
federalpatentpolicies.
EvenifthehistoryoftheUTSAdidnotrevealaclearintenttochangetradesecretlaw,themerefactthattradesecret
principleswerecodifiedinstatelawsshouldhavechangedthetrajectoryofandreferencepointsforthefuturedevelopment

242242SeegenerallyLewis,supranote237.
243243WalterP.Armstrong,ACenturyofService,ACentennialHistoryoftheNationalConferenceofCommissionersofUniformState
Laws13(West1991).

244244SeegenerallyFrankB.Cross,TheTheoryandPracticeofStatutoryInterpretation(2009)(discussingthetextualism,legislative

history,canons,andpragmatismmodelsofstatutoryinterpretation).SeealsoGuidoCalabresi,ACommonLawfortheAgeofStatutes
(1982)(arguingthepragmatismview);AntoninScalia,CommonLawCourtsinaCivilLawSystem:TheRoleofUnitedStatesFederal
CourtsinInterpretingtheConstitutionandLaws,inAMatterofInterpretation:FederalCourtsandtheLaw(1997)(arguingthetextualism
view).

245245Seesupranote244andaccompanyingtext.
246246Seesupranotes44,45andaccompanyingtext.
247247Seesupranote43andaccompanyingtext.SeealsoMilgrim&Benson,supranote20,at101("[TheUTSA]largelycodified
commonlawbutaddedafewfeatures,suchaspossiblestatutoryincreaseofdamagesanddiscretionaryattorneysfees.").

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andapplicationoftradesecretlaw.Thisisduetothefundamentaldifferencebetweenthecommonlawdevelopmentofthe
lawandstatutorylaw.Thecodificationoftradesecretlawintoastatutehadtheeffectoflimitingthefurthercommonlaw
developmentoftradesecretwithintheconfinesofthestatuteitself.Ratherthanhavingthefreedomtoconsidergeneral
principlesofequityandfairnessalongwithprecedentsasdescribedintheRestatementFirstandelsewheretodetermine
whetherandhowtogiverelieftotradesecretclaimants,judgesinUTSAstatesarerequiredtoreadandinterpretastatute.
JusticeScaliaartfullyexplainedtheeffectofastatuteonthecommonlawthisway:"Allofthis[commonlawdevelopment
ofthelaw]wouldbeanunqualifiedgood, [*541] wereit notforatrendingovernment that hasdevelopedinrecent
centuries,calleddemocracy."248
Thepointisthatwhereastatutedefinestherequirementsandparametersofatort,judgescannotsubstitutetheirviewof
applicablelawforthatofstatelegislators,eveniftheirviewfindswidespreadsupportinthecommonlaw.Rather,inthe
samewaythatcaseprecedentcanbeoverruledbycourts,courtsshouldconsidertheextenttowhichastatuteoverrulescase
precedent.
Thedifferencebetweencommonlawandastatuteisperhapsbestseeninthecaseoftradesecretlawwhenoneexaminesthe
competingdefinitionsofatradesecretundertheUTSAandtheRestatementFirst.TheUTSAdefinitionofatradesecretis
veryexact anddetailed.Toberecognizedasatradesecret undertheUTSA,informationmust:(1)besecret(i.e.,not
generallyknownorreadilyascertainable);(2)deriveindependenteconomicvaluefrombeingsecret;and(3)bethesubjectof
effortsthatarereasonableunderthecircumstancestomaintainthesecrecy.Ifaplaintiffinatradesecretcasecannotprove
anyoneofthesefacts,thenheorshedoesnotownatradesecretandcannotbringasuccessfulclaimfortradesecret
misappropriation. In contrast, the Restatement First definition of protectable information is less exacting and more
amorphous.Thisisbecause,inkeepingwiththeroleofaRestatement,theRestatementFirstisacompilationoffactorsthat
differentcommonlawcourtsidentifiedwhenconsideringthebasicquestionwhetheratradesecretclaimant'sinformation
deservedprotection.AccordingtothedraftersoftheUTSA,however,thisapproachprovedunpredictableand,insomecases,
resultedintheoverprotectionofinformation. 249Thus,whereascommonlawcourtsapplyingtheRestatementFirstfactors
hadleewaytorelyontheexistenceofoneormoreofthesixlistedfactors,judgesapplyingtheUTSAmustfocusonthethree
requirementsofatradesecretundertheUTSA.
AnotherexampleofhowtheUTSAchangedthecommonlawtrajectoryoftradesecretlawisintheareaofremedies.
AlthoughsomecourtsinsomestateshadawardedthetypesofremediesthataresetforthintheUTSAbeforetheUTSAwas
adopted,suchremedieswerenotuniversallyrecognized.Thus,deservingplaintiffsintradesecretcasesoftenstruggledto
proveentitlementtoinjunctiverelieforanawardofdamages.TheremediesprovisionsoftheUTSAhadthesalutaryeffect
of eliminating fights about the availability of remedies so that courts could focus their attention on the merits of the
underlyingcase.This,ofcourse,wasaboontotradesecretclaimants.However,atthesametimetheUTSAmadeiteasier
fortradesecretclaimantstoprevailbyeliminatinguncertaintyaboutavailableremedies,italsomadeitmoredifficultto
establishameritoriouscasebymoreclearlydefiningtheessentialelementsofacauseofaction. [*542]UndertheUTSA,
anyuncertaintyaboutwhetheratradesecretclaimantmustproveboththeexistenceofatradesecretandmisappropriation
hasbeeneliminated.
Asawhole,theUTSAattemptstostriketheclassicbalancebetweenfreecompetitionononehandandthepreventionof
unfaircompetitionontheother.Thus,toignoreanyprovisionoftheUTSAinfavorofcommonlawprinciplesasexpressed
intheRestatementFirstputsthisbalanceatrisk.Thisisnottosaythatthereisnoroleforcourtstoplayintheinterpretation
andapplicationoftheUTSA.AlthoughtheUTSAfilledmanyofthegapsintradesecretlawthatwerenotsettledby
commonlawcourts,itleftplaceswheresomediscretionandflexibilityisallowed.Thefreedomtodeterminewhatconstitutes
"reasonableefforts"isoneobviousexample.Courtsarealsoallowedtoaddtotheillustrativelistsofimproperandproper
means.
VI.CONCLUSION
ThehistoryoftheUTSArevealsthepromiseoftheuniformlawmakingprocess.Overthecourseofmorethantwelveyears,
agroupofdedicatedjudges,academics,andpracticinglawyerscarefullystudiedthestateoftradesecretlawcirca1970and
determinedthatthepaceandcourseofitsevolutioncouldbeimprovedwiththeadoptionofauniformlaw.Althoughthe

248248Scalia,supranote244,at4.
249249Seesupranote106andaccompanyingtext.
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initialimpetusbehindtheprojectwasadesiretosolvetheErie/Sears/Compcosqueeze,ultimatelythedraftersoftheUTSA
sawanopportunitytoimprovetradesecretlawinanumberofways.Becausetheindividualswhowereinvolvedinthe
processhadarangeofperspectivesonthetopicsomefavoringtheneedsoftradesecretownersandothersfavoringtheneeds
ofthepublicortheperspectivesofdefendantsandthirdpartiesandnoapparentagendaotherthangoodpolicymaking,the
UTSAreflectstheimportantbalancethat,intheory,allintellectualpropertylawsseektoachieve:abalancebetweenIP
protectionononehandandfreecompetitionontheother.Asaresult,althoughthecarefulapplicationoftheUTSAmay
resultintheinabilityofabusinesstoprotectinformationthatitdeemsvaluable,thatisbydesign.Pursuanttothewell
establishedpolicyoftheUnitedStates,freecompetitionandthedisseminationofinformationistherule,intellectualproperty
protectionistheexception.Itisonlywhenabusiness'sinformationmeetsthecarefullydevelopedrequirementsoftheUTSA
thatitshouldbeprotected.
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