Oregon Trade Secret Law

How does Oregon law protect your company's trade secrets?

Many business owners across Oregon rely on trade secrets to give themselves a competitive edge in their industries. What exactly are trade secrets? They often include customer lists, sensitive marketing information, non-patented or non-patentable inventions, software, formulas and recipes, techniques, processes, and other business information that provides a company with a business edge.

What Does the Law Require to Consider Something a Trade Secret?

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.

Using Nondisclosure Agreements to Protect Oregon Trade Secrets

Employers commonly attempt to protect their trade secrets through having their employees sign nondisclosure agreements (NDAs). NDAs are essentially private contracts in which the employee promises not to disclose certain information learned while working for a prior employer to a future employer.

For example, imagine that you own a glass factory in Portland, Oregon. You have developed certain methods of production that give you a competitive edge by allowing you to produce industrial glass more efficiently than other similar businesses. You have your employees sign an NDA, so that if they leave for a competitor, they are contractually obligated not to share the information about tire production that they have learned while working for you.

If you believe that they violated this obligation, you can sue. This threat of litigation is often enough to prevent employees from stealing trade secrets.

Misappropriation of Trade Secrets in Oregon

Oregon is one of the many states that have adopted the Uniform Trade Secrets Act (UTSA). Oregon’s trade secret law can be found at Or. Rev. Stat. Secs. 646.461 et seq.

The statute defines trade secrets as "information, including a drawing, cost data, customer list, formula, pattern, compilation, program, device, method, technique or process that: (a) Derives independent economic value, actual or potential, from not being generally known to the public or to 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."

Oregon’s version of the UTSA refers to the theft of trade secrets as "misappropriation." Under Oregon law, "misappropriation " refers to 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, breach, 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.

Oregon's "Reason to Know" Standard

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

Penalties for Misappropriation in Oregon

Under Oregon 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.

The law provides that "misappropriation may be temporarily, preliminarily or permanently enjoined." The injunction may be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order 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. Exceptional circumstances can include a theft that's so serious that the court order would be rendered meaningless.

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 Oregon 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.

Oregon Statute of Limitations for Misappropriation

In Oregon, an action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. This means that you must act relatively quickly upon discovery of potential infringement of your company's trade secrets.

Federal Trade Secret Law

In addition to Oregon’s rules regarding trade secrets, certain federal rules also apply in Oregon. 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 UTSA. 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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