Massachusetts Adopts Uniform Trade Secrets Act
In August, Massachusetts became the 49th state to sign into law its version of a Uniform Trade Secrets Act (MUTSA). The new statute is very similar to the Defend Trade Secrets Act (DTSA) – its federal equivalent – and makes it somewhat easier for trade secrets owners to enforce their rights in state courts in Massachusetts. MUTSA will come into effect on October 1, 2018 and will bring two important changes to the existing framework for trade secrets misappropriation claims within that state.
First, the statute provides that trade secrets are protectable if they have “actual or potential” economic value. Under the common law in effect prior to MUTSA’s passage, information had to be in “continuous use” in one’s business in order to be a trade secret. Thus, it had to have actual and not just potential economic value. Second, MUTSA allows courts to enjoin both actual and potential misappropriation of trade secrets. The courts in other jurisdictions have found that this language adopts the inevitable disclosure doctrine which allows trade secret owners to stop their former employees from working for their competitors because their work for the competitor would result in the “inevitable disclosure” of the prior employer’s trade secrets. No appellate courts in Massachusetts have adopted the doctrine of inevitable disclosure, but the codification of “threatened misappropriation” may change that.
Similarly to the Defend Trade Secrets Act, MUTSA permits injunctive relief for trade secrets owners and exemplary damages where a trade secret was misappropriated willfully or maliciously. However, unlike DTSA, it does not contain an ex parte seizure mechanism that allows owners to seize their trade secrets from those who misappropriated them. The statute will not apply to misappropriations that occurred prior to October 1, 2018 or to continuing misappropriations that began prior to that date.
In light of Massachusetts’ recent amendments to its non-competition laws, which make enforcement of non-compete agreements in the state more difficult, MUTSA may become a very useful tool for trade secrets owners seeking injunctive relief based on the inevitable disclosure doctrine or a threatened misappropriation of their trade secrets. For more information about the new MA non-competition law, click here.