Trade Secrets Under Louisiana Law
Business owners often invest large amounts of time and money in the development of technology or other information that gives them significant competitive advantage in the market place. The Louisiana trade secrets statute is one of the effective tools that can be used to protect that investment from theft or other misappropriation.
The Louisiana statute defines a trade secret as information that derives independent economic value from being not generally known to, and not readily ascertainable by, other persons who could obtain economic value from its use or disclosure. Further, the information must be the subject of efforts to preserve its secrecy. L.S.A.– R.S. 51:1431, et seq.
The "information" requirement is defined very broadly, the statute stating that it would include a formula, pattern, compilation, program, device, method, technique or process. Such information as customer lists, special pricing lists, customer identities, pipe handling systems and chemical formulas have been held by courts to be entitled to trade secret status.
The concept adopted by the Louisiana statute is one of "relative secrecy," rather than the "absolute secrecy" standard adopted by some other states. An owner's use of a trade secret by, for example, controlled disclosure to his employees, and even licensees, would be consistent with the requirement of relative secrecy. One controlled release method is to reveal the information to an employee with a written agreement whereby the employee acknowledges the information is secret and obligates himself to hold it in confidence and to not use or disclose it to his own economic advantage.
Courts have not required that extreme or unduly expensive efforts be taken by a person to protect the information's secrecy. Efforts to preserve the secrecy of information need not be the most elaborate and complex humanly possible, rather only need be such as are reasonable under the circumstances. One successful case involved leasing out of a mold used to construct hulls for fiberglass boats. The court allowed trade secret status because, prior to leasing the mold, the owner "maintained exclusive control and did not disclose it to or allow its use by anyone," and that the written lease required, among other things, that the lessee not allow movement of the mold from its shipyard and give advance notice to the owner before using the mold in the construction of each hull. By contrast, in another case that also arose in a lease setting, a court held that an owner had not taken measures reasonable under the circumstances to preserve the secrecy of the information where: (1) prior to leasing, the owner allowed customers to photograph the equipment and allowed several competitors to view photographs of it; and (2) the written lease contained no restrictions on the lessee's use of the information or its disclosure to other parties.
The Louisiana trade secret statute should not be overlooked. The owner of a trade secret has three remedies under the statute, (1) injunctive relief, (2) damages and (3) attorney fees, all three of which can often be granted by a court in a case of theft or other misappropriation of a trade secret.
With this statute, even a small company can affordably protect its trade secret information. A written trade secret confidentiality agreement with all employees as a first step can be accomplished quickly and can often be an effective deterrent.
Republished | Originally published on January 10, 2004
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Disclaimer: This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.