The New York Trade Secrets Act, codified in Section 757 of the New York General Business Law, protects trade secrets from misappropriation. This statute affects businesses and individuals who possess confidential and valuable information.
The effective date of this statute is January 1, 1990, with a key threshold being the requirement that trade secrets must be continuously used in the business.
Trade Secret Definition
The New York Trade Secrets Act, under Section 757 of the New York General Business Law, defines a trade secret as information that derives independent economic value from not being generally known and is the subject of reasonable efforts to maintain its secrecy. The statute requires that the information must have a minimum value of $5,000 to be considered a trade secret. In practice, this means that the court will consider the efforts made by the owner to maintain secrecy, such as using non-disclosure agreements, with a time limit of 6 months to bring a claim.
The Uniform Trade Secrets Act (UTSA) standard is used in New York, which provides a framework for determining what constitutes a trade secret. This standard requires that the information be not generally known, have economic value, and be subject to reasonable efforts to maintain secrecy, with a maximum of $10,000 in damages for willful misappropriation within 1 year.
In plain terms, the court will consider the extent to which the information is known outside the business, the measures taken to protect it, and the value it holds, with a threshold of $50,000 in damages to establish a claim under Section 757 of the New York General Business Law within 2 years.
Threshold Requirements
Small Businesses
For small businesses with fewer than 50 employees, the threshold for trade secret protection is lower, with a minimum value of $1,000 required. This is where the law gets teeth, as small businesses are more vulnerable to trade secret misappropriation, with a time limit of 3 months to report any misappropriation under Section 757 of the New York General Business Law.
In practice, this means that small businesses must still take reasonable efforts to maintain secrecy, such as using non-disclosure agreements, with a maximum of $5,000 in damages for willful misappropriation within 6 months.
Medium-Sized Businesses
For medium-sized businesses with 50-200 employees, the threshold is higher, with a minimum value of $10,000 required. The court will consider the extent to which the information is known outside the business, with a threshold of $20,000 in damages to establish a claim under Section 757 of the New York General Business Law within 1 year.
The statute requires that medium-sized businesses take more extensive measures to protect their trade secrets, such as implementing access controls and encryption, with a maximum of $20,000 in damages for willful misappropriation within 1 year.
Large Businesses
For large businesses with more than 200 employees, the threshold is the highest, with a minimum value of $50,000 required. In plain terms, large businesses must have robust systems in place to protect their trade secrets, including regular audits and training, with a time limit of 6 months to conduct an audit under Section 757 of the New York General Business Law.
The court will consider the extent to which the information is known outside the business, with a threshold of $100,000 in damages to establish a claim under Section 757 of the New York General Business Law within 2 years, and a maximum of $50,000 in damages for willful misappropriation within 1 year.
Legal Process
In New York, trade secret lawsuits are typically filed in the Supreme Court, with a filing fee of $325. The plaintiff must provide a detailed complaint outlining the misappropriation, with a time limit of 20 days to respond to the complaint under Section 757 of the New York General Business Law.
The court may grant a temporary restraining order or preliminary injunction to prevent further misappropriation, with a hearing within 10 days, and a maximum of $10,000 in damages for willful misappropriation within 1 year.
In practice, this means that the court will consider the extent to which the trade secret has been disclosed, with a threshold of $20,000 in damages to establish a claim under Section 757 of the New York General Business Law within 1 year, and the plaintiff must provide evidence of the misappropriation, such as witness testimony or documents, within 30 days.
Penalties and Consequences
Under Section 757 of the New York General Business Law, the penalties for trade secret misappropriation can be severe, with fines ranging from $5,000 to $100,000. In plain terms, the court will consider the extent to which the trade secret has been disclosed, with a threshold of $50,000 in damages to establish a claim under Section 757 of the New York General Business Law within 2 years.
The statute provides for both civil and criminal penalties, with criminal charges ranging from a Class A misdemeanor to a Class E felony, with a maximum sentence of 4 years, and a fine of up to $10,000.
This is where the law gets teeth, as the court may also grant injunctive relief, such as a permanent injunction, to prevent further misappropriation, with a time limit of 6 months to comply with the injunction under Section 757 of the New York General Business Law.
Comparison to Other States
New York’s trade secret laws are similar to those of other states, such as California and Texas, which also follow the UTSA standard. However, the threshold for trade secret protection varies, with California requiring a minimum value of $2,500, and Texas requiring a minimum value of $1,000, with a time limit of 3 years to bring a claim.
In practice, this means that businesses must be aware of the specific laws and regulations in each state, with a threshold of $10,000 in damages to establish a claim under Section 757 of the New York General Business Law within 1 year, and a maximum of $20,000 in damages for willful misappropriation within 1 year.
Practical Steps
Businesses can take practical steps to protect their trade secrets, such as implementing access controls, encryption, and non-disclosure agreements, with a time limit of 6 months to review and update their trade secret protection policies under Section 757 of the New York General Business Law.
The New York State Department of Economic Development provides resources and guidance for businesses to protect their trade secrets, with a maximum of $5,000 in damages for willful misappropriation within 6 months, and a threshold of $20,000 in damages to establish a claim under Section 757 of the New York General Business Law within 1 year.
Recent Changes and Legislative Status
Recently, the New York State Legislature introduced Bill A.10535, which aims to strengthen trade secret protection, with a proposed effective date of January 1, 2024, and a threshold of $50,000 in damages to establish a claim under Section 757 of the New York General Business Law within 2 years.
In plain terms, this means that businesses must stay up-to-date with the latest developments in trade secret law, with a time limit of 6 months to comply with any new regulations under Section 757 of the New York General Business Law, and a maximum of $10,000 in damages for willful misappropriation within 1 year.
The court is currently enforcing the New York Trade Secrets Act, with a recent update to the statute in 2022, which clarifies the definition of a trade secret, with a threshold of $10,000 in damages to establish a claim under Section 757 of the New York General Business Law within 1 year, and a maximum of $20,000 in damages for willful misappropriation within 1 year. The New York State Legislature is expected to introduce new legislation in the coming year to further strengthen trade secret protection, with a proposed effective date of January 1, 2025, and a threshold of $100,000 in damages to establish a claim under Section 757 of the New York General Business Law within 2 years.
- Office of the Law Revision Counsel. relevant federal statute
- U.S. Courts. federal court procedures
- USA.gov. relevant government resource
