New Jersey Trade Secrets Act

Governor Chris Christie of New Jersey signed into law on January 9, 2012 the "New Jersey Trade Secrets Act" (NJTSA). New Jersey now joins its 45 sister States and the District of Columbia in adopting the Uniform Trade Secrets Act (“UTSA”). New York, Texas, Massachusetts and North Carolina remain as the only four states that have not enacted the UTSA. New York and Texas follow the Section 757. Massachusetts has statutory law that creates tort liability for the misappropriation of trade secrets. The NJTSA, introduced on January 1, 2010, is New Jersey’s first statute governing trade secrets.

The NJTSA grants injunctive relief for actual or threatened misappropriation and, in exceptional cases, an “injunction may condition future use on payment of a reasonable royalty.” It also entitles a complainant to damages for misappropriation, which may be calculated to include actual loss and unjust enrichment caused by the misappropriation. Damages caused by misappropriation may also be imposed as a reasonable royalty. Punitive damages are awarded in cases of “willful and malicious misappropriation.”

To ensure against bad conduct by parties on both sides, attorneys’ fees are permitted if: 1) willful and malicious appropriation exits; 2) a misappropriation claim was made in bad faith; or 3) a motion to terminate an injunction is made or resisted in bad faith.

The New Jersey legislature contemplated adopting the UTSA since 2009 and the NJTSA was first passed by the New Jersey Assembly on October 25, 2010, 78-0, and by the Senate on September 26, 2011, 39-0. But it returned to the Assembly for consideration in November because of an amendment clarifying that a court must preserve the secrecy of an alleged trade secret by reasonable means.

It will be some time before differences between the NJTSA and the common law become apparent. However, under the NJTSA, the statute of limitations (“SoL”) to bring a trade secrets claim is three years whereas under the common law, the SoL is six years. The NJTSA is also not identical to the UTSA. Significantly, the NJTSA departs from the UTSA by creating a presumption in favor of granting protective orders in connection with discovery proceedings.