The Nebraska Trade Secrets Act

Most businesses accumulate data valuable not only to their business, but to their competitors. What is the value of your customer list? Or the business model you perfected?

In July 1988, the Nebraska Trade Secrets Act (NTSA) became law. The NTSA was designed with the objective of codifying and strengthening trade secret protection laws in Nebraska.

Under the NTSA, a trade secret is “information, including, but not limited to a drawing, formula, pattern, compilation, program, device, method, technique, code, or process” that derives an independent economic value from “not being ascertainable by proper means” (not public information) and “is subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

The NTSA protects those entities whose secrets were misappropriated through theft, bribery, misrepresentation, breach of a duty to maintain secrecy, espionage through electronic means, or other improper methods.

While courts are reluctant to protect information readily ascertainable through public resources, when time and effort have been expended by businesses to compile information, even if the information could be pieced together through multiple sources, courts may prohibit or provide damages for misappropriated information.

For example, the Nebraska Supreme Court has held a home food service company’s customer list was a trade secret; some “family secret” recipes were protected as trade secrets; and, a freight company’s “customer contact, load, and pricing information” met the definition of a trade secret.

Under the NTSA, a successful complainant can recover damages for misappropriation to include the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation. Damages caused by misappropriation can also be measured by imposition of a reasonable royalty for unauthorized use.

The NTSA also expressly provides misappropriation of a trade secret can also be enjoined by the court – an equitable remedy that restrains an entity from an action; restricts an invasion of a legal right of another; or otherwise compels a person to carry out a specific act.

Further, when filing suit under NTSA, businesses can request a protection order to keep disputed information private and any disclosure in court is expressly not considered abandonment.

Before filing suit, however, it is important businesses take reasonable efforts to maintain the confidentiality of trade secrets. This includes policies such as: 1) written non-disclosure and confidentiality agreements for employees, as well as independent contractors and even potential clients; 2) issuing written demands for the return of all company property upon termination of employment or contractual relationship; 3) exit interviews for all departing employees that reinforce non-disclosure requirements; 4) locking doors and desks containing sensitive information; 5) password protected and encrypted files; and, perhaps most importantly, 6) clearly identifying confidential material as confidential or private.

Employment law experts, like Berry Law, can assist you in drafting solid confidentiality, non-compete, and non-disclosure agreements. Don’t wait for a misappropriation to determine whether you were protected. Call for a free consultation.

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