Does our NDA protect this information as a trade secret in New York?
No general New York trade-secrets statute was found among the New York statutes available for this research; the Court of Appeals says there is no generally accepted definition of a trade secret, and the definition in Restatement of Torts § 757, comment b has been cited with approval by that court and others: a trade secret is any formula, pattern, device or compilation of information which is used in one's business and which gives the holder an opportunity to obtain an advantage over competitors who do not know or use it. The Restatement suggests that in deciding a trade secret claim several factors should be considered: the extent to which the information is known outside the business; the extent to which it is known by employees and others involved in the business; the extent of measures taken to guard its secrecy; its value to the business and its competitors; the amount of effort or money expended in developing it; and the ease or difficulty with which it could be properly acquired or duplicated by others. Above all, the information must in fact be secret, and whether it is is generally a question of fact.
The trap
A contract label does not make a trade secret in New York. Labelling material confidential in an NDA does not answer the Restatement factors, and secrecy is generally a question of fact. In Ashland the trial court found the plaintiff's investment model was not a trade secret but a promotional device, because the trial court credited an expert 'who testified that a financial analyst could, based on the public disclosures made by Ashland, reproduce the calculations without access to the internal computer commands which constitute the Alpha software'; the Court of Appeals held that finding supported by the record and beyond its review, and affirmed the order below. The practical consequence is that confidentiality obligations are enforced as CONTRACT promises on their own terms while a trade-secret claim is judged independently, so the measures-to-guard-secrecy factor has to be met in operations, not only in drafting.
3 authorities
The words that state the rule
There is no generally accepted definition of a trade secret but that found in section 757 of Restatement of Torts, comment b has been cited with approval by this and other courts (Matter of New York Tel. Co. v Public Serv. Commn., 56 NY2d 213, 219, n 3 ; see also, Delta Filter Corp. v Morin, 108 AD2d 991, 992 ; Eagle Comtronics v Pico, Inc., 89 AD2d 803, 804 , lv denied 58 NY2d 601 ). It defines a trade secret as "any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” (Id.) The Restatement suggests that in deciding a trade secret claim several factors should be considered: "(1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others” (Restatement of Torts § 757, comment b). As these considerations demonstrate, a trade secret must first of all be secret: whether it is is generally a question of fact
The words that state the rule
The court concluded that in view of the ease with *408 which others could acquire and duplicate the information, Alpha was not a trade secret but a promotional device. Based on this, it determined defendant was not guilty of misappropriation and the Appellate Division affirmed. This finding is supported by evidence in the record and is, therefore, beyond the scope of our review. Accordingly, the order of the Appellate Division should be affirmed, with costs.
The words that state the rule
Ashland maintains that in finding Alpha was not a trade secret the court relied on the fact that its six financial criteria were public knowledge. It contends the trade secret at issue is not the published criteria used in the calculations, but rather the series of mathematical formulae used to evaluate the criteria (cf., Integrated Cash Mgt. Servs. v Digital Transactions, 920 F2d 171, 174 [2d Cir]). There was conflicting evidence on the point but the trial court chose to credit defendant’s expert who testified that a financial analyst could, based on the public disclosures made by Ashland, reproduce the calculations without access to the internal computer commands which constitute the Alpha software.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.