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Seth C. Oranburg

Law professor and scholar researching how technological disruption destabilizes moral norms and social trust, and how legal design can restore integrity to markets and institutions.

The Trade Secret Paradox

Trade secret law contains a puzzle at its core that distinguishes it from every other area of intellectual property. Walk through a scenario to discover it.

The Scenario

Jordan, your lead engineer, resigned on Friday. On Monday, she starts at your direct competitor. During her three years at your company, Jordan had access to the proprietary algorithm that powers your core product. You believe she took it with her.

You call your lawyer. "Can we sue?"

Your lawyer asks three questions.

Question 1: Is the algorithm "information"?
Trade secrets must be information. This sounds obvious, but not everything qualifies. General skills, industry knowledge, and publicly available methods are not protectable.

Element 1: Information

UTSA § 1(4); Defend Trade Secrets Act, 18 U.S.C. § 1839(3)

Question 2: Does the algorithm derive value from being secret?
A trade secret must have "independent economic value from not being generally known and not readily ascertainable by proper means." The secrecy itself must be what makes it valuable.

Element 2: Independent Economic Value from Secrecy

UTSA § 1(4)(i); DTSA § 1839(3)(B)

Question 3: Did you take "reasonable efforts" to keep it secret?
This is where most trade secret cases are won or lost. The owner must show they took reasonable measures to maintain secrecy. What did you actually do?

Element 3: Reasonable Efforts to Maintain Secrecy

UTSA § 1(4)(ii); DTSA § 1839(3)(A)

The Paradox

You cannot prove misappropriation unless the information was a trade secret.

But you cannot prove something was a trade secret unless you can show that you tried to prevent misappropriation.

The law protects secrets. But whether something is a secret is judged only after someone has allegedly stolen it.

This circularity distinguishes trade secrets from every other form of intellectual property. Patents are granted by the government. Copyrights arise automatically. Trademarks protect symbols used in commerce. But trade secrets are defined by the very secrecy that their misappropriation destroys.

Explore trade secret scholarship → Trade Secret Law course → PTS companion site →