Legal Memorandum: Protectable Trade Secret in NY

Issue: Under New York law, what is a protectable trade secret?

New York follows the definition of “trade secret” set forth in the Restatement of Torts (1939).  A trade secret is “any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.”  Restatement of Torts § 757 cmt. b, quoted in Ashland Management Inc. v. Janien, 82 N.Y.2d 395, 407, 625 N.E.2d 1007, 604 N.Y.S.2d 912, 917-18 (1993).  Comment b sets forth a six-factor test for determining whether something is a trade secret, urging consideration of—

(1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.

Restatement (Second) of Torts § 757 cmt b, quoted in Ashland Management, 82 […]