1.  Introduction

    Trade secrets are protected by state law through California’s
adoption of the Uniform Trade Secrets Act ("UTSA"), found at Section
3426 of the Code of Civil Procedure, in 1984.  Under the UTSA, trade
secrets are defined as any information that has independent actual or
potential economic value from not being generally known or readily
ascertainable by proper means and is the subject of reasonable efforts to
maintain its secrecy.  In general trade secrets include patentable
inventions, including pending patents, and other categories of information
which may or may not be patentable and which go far beyond the
general concept of "inventions."  These other categories include know-
how (such as manufacturing techniques, processes, formulas and
programs), business information (including new product information,
business methods and transactions, marketing plans, sources of supply,
customer lists, the knowledge of a particular customer's needs), and
ideas (including industrial and commercial ideas).

2.  Disclosure/Misappropriation

    Because a trade secret can lose all of its value once it is freely
disclosed to the public, it is extremely important that such information
only be released under written conditions of confidentiality.  Visitors to
your manufacturing facilities should not be allowed to receive proprietary
information without first signing a written agreement that any such
information which they receive will be retained as confidential.  All
drawings and other documents which are sent outside of the company
and which contain proprietary information should bear a legend notifying
the recipient that the information is confidential and is not to be disclosed
without prior permission of the owner.  

    Misappropriation of trade secrets occurs when someone uses
improper means of obtaining or using a trade secret.  As an example, a
person misappropriates a trade secret when they acquire it from another
person (such as an employee or former employee of the company) when
they knew or had reason to know the person was under an obligation to
maintain the secrecy of the trade secret or that it was obtained by
improper means.  Liability can also arise when a person discloses or
uses a trade secret without the owner's consent.  Employees who learn
trade secrets during the course of their employment are legally required
to maintain the confidentiality of the trade secret even after they are no
longer employed by the company.  Trade secret misappropriation can
subject the guilty party to an injunction (an order to cease using or
disclosing the trade secret) and economic damages resulting from loss of
the trade secret.  When the misappropriation is willful and malicious, the
court can award double damages and attorney’s fees.  In addition, trade
secret misappropriation can subject a person to criminal liability.

    Employees who come to work for your company from another
company cannot disclose or use any of the previous employer’s trade
secrets or other confidential information while an employed by your
company.  As set forth above, this information includes customer lists
and buying preferences, new product information and information
concerning proprietary manufacturing processes.  However, an
employee of yours is free to utilize general skills and knowledge that he
or she acquired while employed by another company.  In addition, a
person who has personally developed relationships with customers while
formerly employed by another company can continue those
relationships.  Likewise, an employee of  yours can utilize customer
information that is generally known or easily ascertainable through public
sources.  General engineering principles, publically known mathematical
models and other matters of public knowledge, no matter where
acquired, can be freely utilized.