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Colorado Trade Secrets Part 1

Colorado Trade Secrets Part 1: What is a trade secret under Colorado law?

This multi-part exploration into trade secrets begins with a discussion of Colorado’s definition of trade secret. Later posts will explore Colorado’s trade secret law in greater depth, including the steps that must be taken so that the information does not enter the public domain, enforcement of trade secret protections, and related business practices such as using confidentiality, non-disclosure, and non-compete agreements.

Trade secrets are protected almost exclusively by state law.

Trade secrets are protected almost exclusively by state law.

The definition of “trade secrets” is best understood by distinguishing the legal protection of trade secrets from other forms of intellectual property protection. Unlike patents, copyrights, and trademarks, trade secrets are protected almost exclusively by state law. Like most states (47 states as of this writing), trade secret protection in Colorado is based on the Uniform Trade Secrets Act (UTSA). This Act provides the statutory definition of trade secrets and the codified framework for trade secret protection.

A patent is a published and registered form of intellectual property for a term of years.  In contrast, businesses have to take active steps to keep their trade secrets a secret in order to get legal protection for those secrets.

The USTA, adopted at the state level as Colo. Rev. Stat.  § 7-71-101 et seq., outlines the foundational definition and approach for trade secret law, including the definitions of misappropriation and remedies.

The statutory definition of trade secret is:

“Trade secret" means the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. To be a "trade secret" the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.

Many types of information may fall under this definition, and later posts will explore the specific material and information that have been held to enjoy protection as trade secrets by the courts in Colorado and the specific elements the courts in Colorado consider.  The key to the definition of a trade secret is that value is derived from the information that is:

  1. Not generally known and,
  2. Affirmative actions are taken by the owner to maintain its secrecy.

Mallon & Lonnquist, LLC, is a business and real estate law firm. Reed F. Morris is a Colorado a litigation attorney with Mallon & Lonnquist, based in Denver, Colorado. Reed regularly represents businesses and individuals in business transactions in and in commercial disputes and can be reached at rmorris@mallon-lonnquist.com.

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Colorado Trade Secrets Part 2

The Rise of Non-Competition Clauses in Employment Contracts

The Rise of Non-Competition Clauses in Employment Contracts