Apple Trade Secret Lawsuit Demonstrates Good Trade Secret Pleading
Trade secret practitioners know that in order for information to constitute a trade secret under either federal or state law, it usually (a) must not be known outside of the company and (b) subject to reasonable methods to protect its secrecy. Notwithstanding, many trade secret lawsuits contain just a conclusory allegation that the information constitutes a “trade secret” with very vague allegations (if any) that the company employed reasonable measures to ensure secrecy. Without alleging facts showing the actual steps businesses took to maintain the secrecy, the lawsuits are subject to attack at the pleading stage and/or in discovery. Indeed, lawsuits that fail to specify the measures utilized to maintain secrecy usually end up dismissed before discovery even begins.
A recent lawsuit filed by Apple, found here, against a former employee demonstrates good trade secret pleading. In that case, brought under the Federal Defend Trade Secrets Act and California’s Uniform Trade Secrets Act, Apple alleged specific steps it took to protect the trade secrets. Among them:
• The employee was required to execute a confidentiality and intellectual property agreement, which defined Apple’s proprietary information and required the employee to return to Apple such proprietary information upon separation;
• Apple limited access to proprietary information to only those who were “disclosed” on certain projects. Apple alleged that it strictly controlled those who were disclosed and limited such disclosure to a need-to-know basis, which required sponsorship and a business justification;
• Apple required its employees to regularly take a business conduct course, during which it informed employees about their responsibilities to keep proprietary information confidential;
• Apple also required employees disclosed on certain projects to attend security trainings on maintaining confidentiality, and reinforced the prohibition against disclosure even to family members;
• Apple required contractors and vendors to execute contracts obligating them to keep proprietary information strictly confidential and only provided those contractors proprietary information on a need-to-know basis; and
• Apple secured its computer networks behind a firewall and employed other electronic and physical security measures.
Obviously, Apple has the resources to employ skilled lawyers and security experts to protect its very valuable confidential information. However, smaller business can take many of these steps to protect themselves and put them in a better position should the need arise to seek legal recourse. Practitioners should remember to not assume information is a trade secret, but rather determine the steps employed to maintain secrecy and then clearly include those steps in any lawsuit.