Idaho Trade Secret Law

Idaho is one of many states that have adopted the Uniform Trade Secrets Act.

As a business owner in the Gem State, your company may rely on various forms of proprietary information, sometimes developed over many years. Idaho businesses understandably want to protect trade secrets like customer lists, sensitive marketing information, non-patented inventions, software, formulas and recipes, techniques, processes, and other knowledge that gives your company a business edge.

In legal terms, information is more likely to be considered a trade secret if it is:

  • not known outside of the particular business entity
  • known only by employees and others involved in the business
  • subject to reasonable measures to guard the secrecy of the information
  • valuable, and
  • difficult for others to properly acquire or independently duplicate.
Trade secrets are extremely valuable to businesses. Their theft can severely impact a company's competitiveness in the marketplace. How does Idaho law help to safeguard such trade secrets?

Protecting Trade Secrets Using NDAs in Idaho

Before even considering applicable statutes, many Idaho businesses will attempt to protect their trade secrets by the use of nondisclosure agreements (NDAs). NDAs are essentially private contracts in which the employee promises not to disclose certain information learned while working for the current (or eventually, prior) employer to any future employer.

For example, imagine that you own a manufacturing plant in Boise. You have developed certain methods of production that give you a competitive advantage, allowing your company to produce products more efficiently than other, similar businesses. You require that your employees sign an NDA so that if they leave for a competitor, they are contractually obligated to not share the information about methods that they learned while working for you.

If you believe that an employee has violated the obligations described under the NDA, you can sue for breach. This threat of litigation is often enough to prevent employees from stealing trade secrets.

Misappropriation of Trade Secrets in Idaho

Idaho is one of the many states that have adopted the Uniform Trade Secrets Act (UTSA). Idaho’s trade secret law can be found at Idaho Code Secs. 48-801 et seq.

Idaho's statute defines a trade secret as "information, including a formula, pattern, compilation, program, computer program, device, method, technique, or process, that: (a) 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 (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."

Idaho’s version of the UTSA refers to the theft of trade secrets as misappropriation. Under Idaho law, "misappropriation" means the acquisition of a trade secret by someone who knows or has reason to know that the trade secret was acquired by improper means, such as theft, bribery, misrepresentation, or breach of or inducement of a breach of duty to maintain secrecy. It also includes the disclosure or use of a trade secret without consent by someone who used improper means to acquire knowledge of the trade secret, for example, an ex-employee who spills company secrets to a rival.

Idaho's "Reason to Know" Standard

Idaho prohibits use of trade secrets by a company that has “has reason to know” that the material constitutes a trade secret. This is known as constructive knowledge (versus actual knowledge). In other words, even if a Idaho company was unaware it possessed purloined trade secrets, it can still be prosecuted under Idaho law if it should have known.

Penalties for Misappropriation in Idaho

Under Idaho law, a trade secret thief can be prevented from disclosure by court order, known as an injunction. This is true for both actual or threatened misappropriation under Idaho Code Sec. 48-802. The injunction may be continued for a reasonable period of time to eliminate any commercial advantage that otherwise would be derived from the misappropriation. In exceptional circumstances, an injunction may condition future use upon payment of a reasonable royalty for no longer than the period of time for which use could have been prohibited.

A victim of trade secret theft can also seek financial compensation that measures the actual loss attributed to the theft or the profits (or “unjust enrichment”) acquired by the trade secret thief. Under Idaho Code Sec. 48-803, financial damages for the plaintiff "can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss."

In egregious situations, a Idaho court can award punitive damages up to twice the amount of any award. Attorney fees will also be awarded in cases where the court finds the trade secret theft to have been willful and malicious.

Idaho's Statute of Limitations for Claiming Misappropriation

Pursuant to Idaho Code Sec. 48-805, a lawsuit for trade secret misappropriation must be brought within three years "after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered." Consequently, if you believe that your company has been the victim of a theft of its trade secrets, you should act relatively quickly to retain an attorney and file suit.

Federal Law on Trade Secrets

In addition to Idaho’s rules regarding trade secrets, certain federal rules also apply in Idaho. The Economic Espionage Act of 1996 makes the theft of trade secrets a federal crime. The Act prohibits the theft of a trade secret by a person intending or knowing that the offense will injure a trade secret owner.

The Act also makes it a federal crime to receive, buy, or possess trade secret information knowing it to have been stolen. The Act’s definition of “trade secret” is similar to that of the Uniform Trade Secrets Act.

The penalties for a violation of this statute include a potential prison term of 15 years and fines up to $5 million, depending on whether the defendant is an individual or a corporation. A private party can still sue for trade secret theft even if the federal government files a criminal case under the Economic Espionage Act.

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