Massachusetts Trade Secret Law
Massachusetts is one of a few states that have not adopted the Uniform Trade Secrets Act.
By Rich Stim
Trade secrets in Massachusetts comprise information that is secret and: tangible; intangible; or electronically kept or stored. It should constitute: scientific information; technical information; merchandising information; production information; management information; a design; a process; a procedure; a formula; an invention; or an improvement.
Information is more likely to be considered a trade secret in Massachusetts 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 typically protected by nondisclosure agreements (NDAs).
Although Massachusetts has not yet adopted the Uniform Trade Secrets Act, a bill was proposed in the state legislature in January 2013, to do so. Information about Massachusetts’s current trade secret law can be found here.
Stealing Secrets (Misappropriation) in Massachusetts
Massachusetts’s courts and statutes refer to the theft of trade secrets as misappropriation. Under Massachusetts law, "misappropriation " refers to the acquisition of a trade secret by someone who knows that the trade secret was acquired by improper means -- theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy.
Penalties for Misappropriation
Under Massachusetts law, a trade secret thief can be prevented from disclosure by court order – an injunction. This is true for both actual or threatened misappropriation. 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. In egregious situations, a Massachusetts court can award punitive damages up to twice the amount of any award. Attorney fees will also be awarded in egregious (willful and malicious) situations or if a claim is brought in bad faith.
Statute Of Limitations
An action for misappropriation must be brought within 3 years after the misappropriation is discovered (or within 4 years if brought under Chapter 93A, section 11 of the Consumer Protection Act).
In addition to Massachusetts’s rules regarding trade secrets, certain federal rules also apply in Massachusetts. 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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