Trade Secret Misappropriation
Trade secrets are governed by state law. In Arkansas, the Arkansas Trade Secrets Act (ATSA) is the controlling statutory scheme. See A.C.A. § 4-75-601, et seq. Arkansas courts also supplement these provisions with common law principles. A trade secret misappropriation claim consists of two elements: (1) a valid trade secret; and (2) misappropriation by the defendant.
1. Existence of a Trade Secret
A trade secret is defined by statute as:
(4) information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(A) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(B) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
In addition to the statute, courts consider a six-factor analysis in determining whether information qualifies as a trade secret: (1) the extent to which the information is known outside the business; (2) the extent to which the information is known by employees and others involved in the business; (3) the extent of measures taken by the company to guard the secrecy of the information; (4) the value of the information to the company and to its competitors; (5) the amount of effort or money expended by the owner in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Tyson Foods, Inc. v. ConAgra, Inc., 349 Ark. 469 (2002).
2. Misappropriation by the Defendant
Misappropriation is defined as:
(A) Acquisition of a trade secret of another by a person who knows or who has reason to know that the trade secret was acquired by improper means; or
(B) Disclosure or use of a trade secret of another without express or implied consent by a person who:
(i) used improper means to acquire knowledge of the trade secret; or
(ii) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was:
(a) derived from or through a person who had utilized improper means to acquire it;
(b) acquired under circumstances giving rise to a duty to maintain its secrecy or limits its use; or
(c) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limits its use; or
(iii) Before material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
The main point is that the trade secret owner has a cause of action against both (1) the party who wrongfully uses the trade secret; and (2) the party who wrongfully acquires the trade secret.
