Michigan Adopts The Uniform Trade Secrets Act

The Michigan legislature adopted the "Uniform Trade Secrets Act" ("the Act") to prohibit the misappropriation or improper disclosure of trade secrets. This Act has been adopted by the majority of states. It does not change the law but does codify it in one comprehensive statute.

The Act defines a trade secret broadly as information, including a formula, pattern, compilation, program, device, method, technique, or process, that 1) derives independent economic value from not being generally known, and 2) is reasonably protected as confidential.

Misappropriation is broadly defined to include the "acquisition of a trade secret by a person who knows or has reason to know that the trade secret was acquired by improper means." Misappropriation also includes the disclosure of a trade secret of another without express or implied consent.

Actual or threatened misappropriation may be enjoined under the Act. The Act also provides for monetary damages if the misappropriation is willful and malicious. A party wrongly accused of misappropriation may recover attorney fees if his accuser acted in bad faith.

The Act specifically provides that a court shall preserve by reasonable means the secrecy of an alleged trade secret during the course of litigation.

Lawsuits claiming misappropriation must be brought within three years after the misappropriation is discovered or should have been discovered.

The Act is effective (retroactively) as of October 1, 1998 but does not apply to misappropriation which occurred before that date or to continuing misappropriation that occurs after that date but which began before October 1, 1998.

While the Act provides statutory authority for a court to enjoin the misappropriation of trade secrets, it remains to be seen whether the courts will consistently enforce this statute. In the mean time, we strongly advise employers to require their employees to sign a confidentiality agreement that includes consent to an injunction for any violation.