For many businesses, the most valuable assets are not tangible property but intangible information — customer lists, manufacturing processes, software algorithms, formulas, pricing strategies, and marketing plans that competitors would love to obtain. Trade secret law exists to protect this information, and since 2016, businesses in Nebraska have had access to both a federal cause of action and a state law remedy when trade secrets are misappropriated. Understanding how these two legal frameworks work, what qualifies as a protectable trade secret, and how to build effective internal protections is essential for any business that relies on proprietary information to compete.
What Qualifies as a Trade Secret?
Under both the federal Defend Trade Secrets Act (DTSA) and Nebraska's version of the Uniform Trade Secrets Act (Neb. Rev. Stat. §87-501 et seq.), a trade secret is broadly defined. To qualify for protection, the information must derive independent economic value from not being generally known or readily ascertainable by others who could benefit from its use, and the owner must take reasonable measures to keep it secret.
The range of information that can qualify as a trade secret is expansive:
The key distinction from patented inventions is that trade secret protection does not require registration and can last indefinitely — as long as the information remains secret. The famous example is the Coca Cola formula, which has never been patented and has been protected as a trade secret for well over a century. However, unlike a patent, trade secret protection provides no remedy against a competitor who independently develops the same information through legitimate means.
The Federal Defend Trade Secrets Act
Enacted in 2016, the DTSA created a federal private right of action for trade secret misappropriation, allowing businesses to pursue claims in federal court regardless of the state where the misappropriation occurred. This was a significant development because federal court often offers procedural advantages in complex commercial cases, including more robust discovery mechanisms and potentially more experienced judges for sophisticated business disputes.
The DTSA provides for both compensatory damages — including unjust enrichment of the misappropriating party — and, in exceptional cases of willful and malicious misappropriation, exemplary damages of up to twice the amount of compensatory damages plus attorney's fees. The DTSA also allows courts to issue ex parte seizure orders in extraordinary circumstances, permitting the seizure of property used to commit or facilitate misappropriation before the defendant has notice of the lawsuit. This powerful remedy is reserved for situations where a misappropriating former employee is about to leave the country with stolen files, for example, or where advance notice would result in the immediate destruction of evidence.
Trade secret protection is only as strong as the measures you take to maintain secrecy. Courts routinely deny protection to businesses that failed to treat their own information as secret through their own conduct.
Nebraska's Uniform Trade Secrets Act
Nebraska adopted the Uniform Trade Secrets Act in 1988, providing state law remedies for trade secret misappropriation that complement the DTSA. Nebraska's UTSA allows for injunctive relief to prevent ongoing misappropriation, damages including both actual loss and unjust enrichment, and attorney's fees in cases involving willful and malicious misappropriation or bad faith claims. Nebraska courts have applied the UTSA in a wide range of commercial contexts, including disputes between employers and former employees, between competitors, and between business partners following a dissolution.
One important difference between state and federal remedies involves the statute of limitations. Nebraska's UTSA provides a three year limitations period running from the date the misappropriation is discovered or reasonably should have been discovered. The DTSA similarly provides a three year period. Prompt action after discovering potential misappropriation is critical to preserve your claims.
Building Effective Internal Trade Secret Protections
The most common reason trade secret claims fail is that the plaintiff cannot demonstrate they took reasonable measures to maintain the secrecy of the information. Courts look at the totality of the company's protective measures. Effective protections typically include:
When Misappropriation Occurs
If you suspect that a former employee or competitor has misappropriated your trade secrets, acting quickly and strategically is essential. Preserve all relevant evidence immediately, including electronic communications and access logs. Consult with legal counsel before making any public accusations or contacting the suspected misappropriator, as missteps in the early stages can compromise your legal position.
In appropriate cases, a court may issue a temporary restraining order or preliminary injunction to stop ongoing misappropriation while the case is litigated, preventing a competitor from using stolen information to gain market share during the pendency of the lawsuit. The attorneys at Horgan Law Firm have experience advising businesses on trade secret protection and pursuing misappropriation claims in Nebraska courts and federal courts. Contact us to discuss how we can help protect your most valuable business assets.
