Wyoming Trade Secret Law

As a Wyoming business owner, you should be familiar with the legal protections on trade secrets that are available to you.

Many business owners across Wyoming rely on trade secrets to give themselves a competitive edge in their industries. What are trade secrets? They often comprise 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.

Information is 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 Non-Disclosure Agreements to Protect 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 tire factory in Cheyenne, Wyoming. You have developed certain methods of production that give you a competitive edge by allowing you to produce industrial tires 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.

The Law on Misappropriation of Trade Secrets in Wyoming

Wyoming is one of the many states that have adopted the Uniform Trade Secrets Act. Wyoming’s trade secret law can be found at Wyo. Statutes Secs. 40-24-101 et al.

The statute defines a trade secret as "information, including a formula, pattern, compilation, 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."

Wyoming’s version of the Uniform Trade Secrets Act refers to the theft of trade secrets as misappropriation. Under Wyoming law, "misappropriation" is 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.

Wyoming's Reason to Know Standard

Wyoming 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 Wyoming company was unaware it possessed purloined trade secrets, it could still be prosecuted under Wyoming law if it should have known.

Penalties for Misappropriation

Under Wyoming 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 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 be a theft so bad that the court order would be rendered meaningless.

A victim of trade secret theft can also seek financial compensation, which measures the actual loss attributed to the theft or the profits (or “unjust enrichment”) acquired by the trade secret thief. In egregious situations, a Wyoming 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 for Misappropriation of Trade Secrets in Wyoming

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.

Applicable Federal Law in Wyoming

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