Trade secrets laws for South Carolina employees apply regardless of whether the employee signed any sort of agreement or contract. These days, many companies require an employee to sign a non-compete or non-solicitation agreement before starting work. Often these agreements contain “confidential business information” provisions as well, related to certain documents and information that the company believes are private and confidential. If you sign that contract, you are bound to the provisions contained within the agreement (although the enforceability of certain non-competes and non-solicits can always be argued).
But there’s a type of information that is a step above “confidential information.” And because it’s at a higher level, the state and federal governments have passed trade secrets laws for South Carolina employees directly related to such information. South Carolina has it’s own “South Carolina Trade Secrets Act,” applicable to all South Carolina employees. And back in 2016, the U.S. Congress passed the Defend Trade Secrets Act that federalized state trade secrets laws and made it possible for companies to sue directly in federal court, along with some other legal remedies. I wrote about that law in more detail back in 2016: read more here.
So what is a trade secret? Well, if you get a cease and desist nastygram from your former employer’s lawyer, EVERYTHING is a trade secret, no matter how commonly known to the public. But the law actually defines what a trade secret means. South Carolina defines it as:
- (a) information including, but not limited to, a formula, pattern, compilation, program, device, method, technique, product, system, or process, design, prototype, procedure, or code that:
- (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other person who can obtain economic value from its disclosure or use, and
- (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
- (b) A trade secret may consist of a simple fact, item, or procedure, or a series or sequence of items or procedures which, although individually could be perceived as relatively minor or simple, collectively can make a substantial difference in the efficiency of a process or the production of a product, or may be the basis of a marketing or commercial strategy. The collective effect of the items and procedures must be considered in any analysis of whether a trade secret exists and not the general knowledge of each individual item or procedure.
So, what does that mean? First, it has to be information that is not generally known and that the company has taken steps to protect, through electronic security measures, having people sign non-disclosure agreements, etc. In other words, you must keep it secret…you must keep it safe.
Second, it has to be information that constitutes a formula, pattern, compilation, program, device, method, technique, product, system, or process, design, prototype, procedure, or code. Within that definition is a whole world of litigation, as courts have looked at a wealth of possible information to see whether the proffered information meets the high standard for a trade secret. An easy example is the formula for Coca-Cola, but plenty of other information, including blueprints, marketing plans, or customer lists could potentially meet that standard.
Ultimately, South Carolina employees who are confronted with an employment contract that addresses non-competes/non-solicits, confidential information, and trade secrets should take steps to that contract reviewed by a South Carolina employment lawyer. And if you’re on the receiving end of a cease and desist letter or lawsuit after you leave employment, you should speak with a lawyer immediately about your legal options.