What Is a Trade Secret and How Does Kentucky Protect Them?

A trade secret is a valuable piece of information that gives a business a competitive edge in the marketplace. This can include formulas, practices, processes, designs, instruments, or a compilation of information that is not generally known or reasonably ascertainable by others. Unlike patents, which require public disclosure, trade secrets remain confidential as long as they are kept secret and provide economic value. Kentucky has specific laws and regulations in place to protect these vital business assets.

In Kentucky, trade secrets are primarily protected under the Kentucky Uniform Trade Secrets Act (KUTSA), which aligns with the Uniform Trade Secrets Act model. The law defines a trade secret in KRS 365.880 as information that derives independent economic value from not being generally known or readily ascertainable and is subjected to reasonable efforts to maintain its secrecy.

For a piece of information to qualify as a trade secret in Kentucky, it must meet several criteria:

• Secrecy: The information must not be known or readily accessible to the public.
• Economic Value: The trade secret must provide a competitive advantage to its holder.
• Reasonable Measures: The entity must take reasonable steps to keep the information confidential, such as confidentiality agreements or secure storage practices.

One of the key protections under the KUTSA is the prohibition of misappropriation. Misappropriation occurs when someone acquires a trade secret through improper means, such as theft, bribery, or breach of confidentiality agreements. If a company believes their trade secret has been misappropriated, they can bring a civil suit against the offending party.

The potential remedies for misappropriation include:

• Injunctions: Courts can issue orders to prevent further use or disclosure of the trade secret.
• Monetary Damages: Victims can seek damages that may include the actual loss caused by the misappropriation and any unjust enrichment gained by the wrongdoer.
• Attorney Fees: In cases of willful and malicious misappropriation, the court may award attorney fees.

Kentucky's legal framework also encourages businesses to implement robust internal practices to safeguard their trade secrets. Common strategies include:

• Employee Training: Educating employees on the importance of trade secrets and the proper handling of sensitive information.
• Confidentiality Agreements: Requiring employees and business partners to sign agreements that legally bind them to confidentiality.
• Access Controls: Limiting access to trade secrets to only those individuals who need to know within the organization.

In conclusion, a trade secret is a critical asset for businesses, and Kentucky offers a solid legal framework to protect these secrets through the KUTSA. By understanding what constitutes a trade secret and employing reasonable measures to maintain confidentiality, businesses in Kentucky can safeguard their competitive advantages in the market.