Protecting confidential information and trade secrets requires more than labeling a document “confidential.” Under Pennsylvania law, a trade secret must derive independent economic value from not being generally known and must be subject to reasonable efforts to maintain its secrecy. If you want your information protected, you have to treat it that way from the start.
What Qualifies as a Trade Secret in Pennsylvania?
Pennsylvania has adopted the Uniform Trade Secrets Act, which defines a trade secret as information that:
- Derives independent economic value from not being generally known or readily ascertainable by others, and
- Is subject to reasonable efforts to maintain its secrecy.
Trade secrets can include:
- Customer lists and pricing data
- Proprietary formulas or manufacturing processes
- Product designs and technical specifications
- Software code and algorithms
- Business plans, marketing strategies, and supplier terms
Not every confidential document qualifies. General skills, publicly available information, or knowledge that can be easily reverse-engineered typically will not meet the standard. Courts look closely at how you treated the information. If it was widely shared without restriction, it may lose trade secret status.
What Security Measures Are Required to Protect Trade Secrets?
There is no single checklist, but Pennsylvania law requires “reasonable efforts” to maintain secrecy. What is reasonable depends on your industry, company size, and the nature of the information.
Common protective measures include:
- Limiting access to sensitive information on a need-to-know basis
- Password-protecting files and using multi-factor authentication
- Marking documents as confidential
- Securing physical files in locked cabinets or restricted areas
- Using secure servers and encrypted communications
- Training employees on confidentiality policies
If you fail to implement safeguards, a court may find that you did not take adequate steps to protect your information. That can undermine any claim for misappropriation later.
How Should You Document Confidentiality Internally?
Courts evaluate documentation when deciding whether information qualifies as a trade secret. A written record of your policies and procedures can make a meaningful difference.
Consider implementing:
- A written confidentiality and data protection policy
- Clear document classification procedures
- A centralized system for tracking access to sensitive materials
- Exit interview checklists that address return of company property
- Logs of who has access to key trade secret assets
You should also consistently label proprietary materials as confidential and keep records of when and how they were shared. If information is disclosed to vendors or business partners, document the terms of that disclosure.
Good documentation shows that you treated the information as valuable and secret, not casually or inconsistently.
What Are Employee and Contractor Confidentiality Obligations?
Employees and independent contractors do not automatically have unlimited access to use your confidential information after they leave. Their obligations depend on statutory law, common law duties, and written agreements.
Employment Agreements and NDAs
We often recommend:
- Confidentiality agreements
- Non-disclosure agreements (NDAs)
- Invention assignment clauses
- Non-solicitation provisions where appropriate
These agreements should clearly define what constitutes confidential information and outline the employee’s duty not to disclose or misuse it during and after employment.
Fiduciary and Common Law Duties
Even without a written agreement, certain employees may owe duties of loyalty and confidentiality. However, relying on unwritten obligations increases risk. Written agreements provide clarity and improve enforceability.
For contractors, a properly drafted services agreement should address ownership of work product, data handling standards, and post-termination restrictions.
What Is Trade Secret Misappropriation?
Misappropriation occurs when someone acquires, discloses, or uses a trade secret through improper means, such as theft, breach of a confidentiality agreement, or unauthorized access.
Common scenarios include:
- A departing employee downloads client lists before resigning
- A competitor obtains proprietary data through a former contractor
- A vendor exceeds the scope of permitted use under a contract
Early action matters. Once confidential information spreads, damage can escalate quickly.
What Remedies Are Available for Trade Secret Theft?
If your trade secrets are misappropriated, Pennsylvania law provides several remedies.
You may seek:
- Injunctive relief to stop further use or disclosure
- Monetary damages for actual losses
- Unjust enrichment damages
- Exemplary damages for willful misconduct
- Attorneys’ fees in certain cases
In some situations, the Defend Trade Secrets Act may also apply, allowing you to pursue claims in federal court.
Taking Control Before a Dispute Arises
Protecting confidential information is both a legal and operational issue. If you wait until an employee leaves or a competitor begins using your data, your options may narrow.
We help businesses:
- Draft and update confidentiality agreements
- Create internal policies and documentation systems
- Respond to suspected trade secret theft
- Enforce rights through negotiation or litigation
Protect Your Competitive Advantage Before It Is Tested
Your confidential information may be one of your company’s most valuable assets. When you treat it accordingly and document your safeguards, you strengthen your position if a dispute occurs.
If you have concerns about protecting trade secrets or responding to suspected misappropriation, contact Jones, Gregg, Creehan & Gerace. We can review your policies, update your agreements, and take swift action to protect your business.