Chivukula Bill to Help Protect N.J. Business Trade Secrets Clears Senate

Bill Encourages Innovation to Create Jobs & Economic Development

(Trenton) - Legislation sponsored by Assemblyman Upendra Chivukula to help protect the trade secrets so important to many New Jersey businesses was approved 39-0 by the Senate on Monday, sending it back to the Assembly for final legislative approval.

The bill (A-921) creates the "New Jersey Trade Secrets Act," and is based on legislation adopted in 46 states and the District of Columbia.

"New Jersey has long been the home to innovation, and in the ever increasingly competitive global marketplace, we need to do what we need to ensure those innovations and ideas remain protected from piracy and theft," said Chivukula (D-Somerset/Middlesex).  "New Jersey businesses deserve the same protections given to those in 46 states and D.C., especially if we're going to encourage innovation and the job creation and economic growth they bring."

Under the legislation, trade secrets means information help by one or more people, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process, that:

• Derives independent economic value, actual or potential, from not being generally know to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
• Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

"The ideas, inventions and innovations that make New Jersey businesses leaders throughout the world are vital to the long-term strategy and economic strength," Chivukula said.  "Those who would steal these ideas need to clearly know the consequences of their actions."

The bill sets forth the remedies that are available to the holder of a trade secret that has been misappropriated, which the bill defines as acquired by improper means or improperly disclosed.  Those remedies include:

• Damages for both the actual loss suffered by the plaintiff and for any unjust enrichment of the defendant caused by the misappropriation.  Damages may also include the imposition of a reasonable royalty for unauthorized disclosure or use.
• Injunctive relief for actual or threatened misappropriation of a trade secret.  Under certain exceptional circumstances, an injunction may condition future use upon payment of a reasonable royalty.
• In cases involving the willful and malicious misappropriation of a trade secret, punitive damages, if awarded by the court, in an amount not exceeding twice that awarded for actual damages and unjust enrichment.
• The award of attorney's fees by the court if willful and malicious misappropriation exists, a claim of misappropriation is made in bad faith or a motion to terminate an injunction is made or resisted in bad faith.

The bill also contains language indicating that if a public entity or employee is the defendant in any action brought for the misappropriation of a trade secret, the provisions of the New Jersey Tort Claims Act would supersede any conflicting provision of the bill.

The bill was approved 78-0 by the Assembly in October.  The Assembly must consider the bill again because of an amendment clarifying that the court shall preserve the secrecy of an alleged trade secret by reasonable means consistent with the rules of court.