Does our NDA add anything to Maine trade-secret law, and does the Act swallow it?
It adds a great deal, and the Act expressly leaves it alone. 10 M.R.S. § 1548(1) provides that "[e]xcept as provided in this section, this Act displaces conflicting tort, restitutionary and other laws of this State providing civil remedies for misappropriation of a trade secret", but that it "does not affect ... [c]ontractual remedies, whether or not based upon misappropriation of a trade secret", nor "[o]ther civil remedies that are not based upon misappropriation of a trade secret", which answers the displacement question for information that is not a trade secret at all. The statutory floor is narrow: a "[t]rade secret" is "information, including, but not limited to, a formula, pattern, compilation, program, device, method, technique or process" that "[d]erives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means" and "[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy" (§ 1542(4)), and "a court examining a claim under the UTSA must determine whether the information at issue constitutes a 'trade secret'" before anything else (Spottiswoode v. Levine, where the claimant failed on exactly that and the judgment against it was affirmed). The contract can go wider: "[t]he confidential knowledge or information protected by a restrictive covenant need not be limited to information that is protected as a trade secret by the UTSA. We have not previously read such limitations into restrictive covenants and do not do so now" (Bernier v. Merrill Air Engineers, Inc.).
The trap
Bernier is the sentence that makes a Maine NDA worth drafting, but it comes with the Bernier qualification in the same passage: "[t]o be enforceable, however, restrictive covenants must be reasonable. The reasonableness of a restrictive covenant is a question of law." A confidentiality covenant that in substance stops the employee working is a restrictive covenant being tested for reasonableness, and 26 M.R.S. § 599-A(2) treats "confidential information that does not qualify as a trade secret" as a legitimate interest, which cuts both ways, since it is the interest that must justify a covenant no broader than necessary. Three things to know before choosing between the statutory claim and the contractual one. The statutory claim is harder than it looks: proving the information is a trade secret is only the first step, and "RBK could not recover damages or obtain injunctive relief under the UTSA without establishing 'misappropriation'" as the Act defines it. It is also time-limited in a way a contract claim is not: § 1547 requires an action for misappropriation "within 4 years after the misappropriation is discovered or, by the exercise of reasonable diligence, should have been discovered", and "a continuing misappropriation constitutes a single claim", so the clock does not restart with each use. And it carries a fee risk in both directions: under § 1545, where "a claim of misappropriation is made in bad faith" or "willful and malicious misappropriation exists", the court "may award reasonable attorneys fees to the prevailing party". This rule states no Maine limit on how long a confidentiality covenant may run.
13 authorities
- statute10 M.R.S. § 1548enactment date not established
The words that state the rule
Except as provided in this section, this Act displaces conflicting tort, restitutionary and other laws of this State providing civil remedies for misappropriation of a trade secret. This Act does not affect: A. Contractual remedies, whether or not based upon misappropriation of a trade secret; [PL 1987, c. 143 (NEW).] B. Other civil remedies that are not based upon misappropriation of a trade secret;
- statute10 M.R.S. § 1542enactment date not established
The words that state the rule
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
- statute10 M.R.S. § 1542enactment date not established
The words that state the rule
"Trade secret" means information, including, but not limited to, a formula, pattern, compilation, program, device, method, technique or process, that: A. Derives independent economic value, actual or potential, from not being generally known
- statute10 M.R.S. § 1547enactment date not established
The words that state the rule
An action for misappropriation must be brought within 4 years after the misappropriation is discovered or, by the exercise of reasonable diligence, should have been discovered. For the purposes of this section, a continuing misappropriation constitutes a single claim.
- statute10 M.R.S. § 1545enactment date not established
The words that state the rule
If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith or willful and malicious misappropriation exists, the court may award reasonable attorneys fees to the prevailing party.
The words that state the rule
a court examining a claim under the UTSA must determine whether the information at issue constitutes a “trade secret,” as that term is defined in 10 M.R.S.A. § 1542(4).
The words that state the rule
Even if the computer program qualified as a trade secret. RBK could not recover damages or obtain injunctive relief under the UTSA without establishing “misappropriation,” See 10 M.R.S.A § 1544. The term “misappropriation” means, inter alia: “[disclosure or use of a trade secret of another without express or implied consent by a person who ... [a]t the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was ... [a]cquired under circumstances giving rise to a duty to maintain its secrecy or limit its use....” 10 M.R.S.A. § 1542(2)(B).
The words that state the rule
Thus, RBK bore the burden of establishing that the information at issue constituted a “trade secret” and that Levine “misappropriated” the protected information. The trial court found that RBK failed to sustain its burden. We are not compelled to find otherwise. The entry is: Judgment affirmed.
The words that state the rule
The confidential knowledge or information protected by a restrictive covenant need not be limited to information that is protected as a trade secret by the UTSA. We have not previously read such limitations into restrictive covenants and do not do so now.
The words that state the rule
To be enforceable, however, restrictive covenants must be reasonable. The reasonableness of a restrictive covenant is a question of law.
- statute26 M.R.S. § 599-Aenactment date not established
The words that state the rule
Noncompete agreements are contrary to public policy and are enforceable only to the extent that they are reasonable and are no broader than necessary to protect one or more of the following legitimate business interests of the employer:
- statute10 M.R.S. § 1542enactment date not established
The words that state the rule
Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
- statute26 M.R.S. § 599-Aenactment date not established
The words that state the rule
B. The employer's confidential information that does not qualify as a trade secret; or
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.