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A06419 Summary:

COSPNSRDickens, Mosley, Sepulveda, Hyndman, Ra, Giglio, Cook, Seawright
MLTSPNSRErrigo, Lawrence
Add Art 17-B §§279-m - 279-v, Gen Bus L; amd §8303-a, CPLR
Relates to creating the uniform trade secrets act.
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A06419 Text:

                STATE OF NEW YORK
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                      March 7, 2017
        Introduced  by M. of A. VANEL -- read once and referred to the Committee
          on Judiciary
        AN ACT to amend the general business law and the civil practice law  and
          rules, in relation to the uniform trade secrets act
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. The general business law is amended by adding a new article
     2  17-B to read as follows:
     3                                ARTICLE 17-B
     4                          UNIFORM TRADE SECRETS ACT
     5  Section 279-m. Short title.
     6          279-n. Definitions.
     7          279-o. Injunctive relief.
     8          279-p. Damages.
     9          279-q. Attorney's fees.
    10          279-r. Preservation of secrecy.
    11          279-s. Statute of limitations.
    12          279-t. Effect on other law.
    13          279-u. Uniformity of application and construction.
    14          279-v. Severability.
    15    § 279-m. Short title. This article shall  be  known  as  the  "uniform
    16  trade secrets act".
    17    §  279-n.  Definitions.  As  used  in this article, unless the context
    18  requires otherwise:
    19    (a)  "Improper  means"  includes  theft,  bribery,  misrepresentation,
    20  breach or inducement of a breach of a duty to maintain secrecy, or espi-
    21  onage through electronic or other means;
    22    (b)  "Misappropriation"  means:  (1)  acquisition of a trade secret of
    23  another by a person who knows or has  reason  to  know  that  the  trade
    24  secret  was  acquired  by improper means; or (2) duplicating, sketching,
    25  drawing, photographing, downloading,  uploading,  concealing,  altering,
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 6419                             2
     1  destroying,  replicating,  transmitting,  delivering,  sending, mailing,
     2  communicating, or conveying a trade secret without authorization; or (3)
     3  receiving, buying, or possessing a trade secret,  knowing  the  same  to
     4  have been stolen or appropriated, obtained, or converted without author-
     5  ization;  or  (4) disclosure or use of a trade secret of another without
     6  express or implied consent by a person who:
     7    (i) used improper means to acquire knowledge of the trade secret; or
     8    (ii) at the time of disclosure or use, knew or had reason to know that
     9  his or her knowledge of the trade secret was:
    10    (A) derived from or through a person who had utilized  improper  means
    11  to acquire it;
    12    (B) acquired under circumstances giving rise to a duty to maintain its
    13  secrecy or limit its use; or
    14    (C)  derived  from  or  through a person who owed a duty to the person
    15  seeking relief to maintain its secrecy or limit its use; or
    16    (iii) before a material change of his or her  position,  knew  or  had
    17  reason  to  know that it was a trade secret and that knowledge of it had
    18  been acquired by accident or mistake;
    19    (c) "Person" means a natural person,  corporation,  limited  liability
    20  company,  business trust, estate, trust, partnership, association, joint
    21  venture, government, governmental subdivision or agency,  or  any  other
    22  legal or commercial entity; and
    23    (d)  "Trade  secret"  means  any form and type of financial, business,
    24  scientific, technical, economic, or engineering information, including a
    25  pattern, plan, compilation, program device, formula, design,  prototype,
    26  method,  technique, process, procedure, program, or code, whether tangi-
    27  ble or intangible, and whether or how stored, compiled, or  memorialized
    28  physically, electronically, graphically, photographically or in writing,
    29  that:
    30    (1)  derives independent economic value, actual or potential, from not
    31  being generally known to, and not being readily ascertainable by  proper
    32  means  by,  other persons who can obtain economic value from its disclo-
    33  sure or use; and
    34    (2) is the subject of efforts that are reasonable  under  the  circum-
    35  stances to maintain its secrecy.
    36    §  279-o. Injunctive relief. (a) Actual or threatened misappropriation
    37  may be temporarily, preliminarily, or permanently enjoined. Upon  appli-
    38  cation  to  the  court,  an  injunction  shall be vacated when the trade
    39  secret has ceased to exist, but the injunction may be continued  for  an
    40  additional  reasonable  period  of time in order to eliminate commercial
    41  advantage that otherwise would be derived from the misappropriation.
    42    (b) In exceptional circumstances, an injunction may  condition  future
    43  use  upon  payment of a reasonable royalty for no longer than the period
    44  of time for which use could have been  prohibited.  Exceptional  circum-
    45  stances  include,  but  are  not  limited to, a material and prejudicial
    46  change of position prior to acquiring knowledge or  reason  to  know  of
    47  misappropriation that renders a prohibitive injunction inequitable.
    48    (c) In appropriate circumstances, the court may order affirmative acts
    49  to protect a trade secret.
    50    §  279-p. Damages. (a) Except to the extent that a material and preju-
    51  dicial change of position prior to acquiring knowledge or reason to know
    52  of misappropriation renders a monetary recovery inequitable, a complain-
    53  ant is entitled to recover damages  for  misappropriation.  Damages  can
    54  include  both  the actual loss caused by misappropriation and the unjust
    55  enrichment caused by misappropriation that is not taken into account  in
    56  computing actual loss. In lieu of damages measured by any other methods,

        A. 6419                             3
     1  the  damages caused by misappropriation may be measured by imposition of
     2  liability for a reasonable royalty for a misappropriator's  unauthorized
     3  disclosure or use of a trade secret.
     4    (b)  If  willful  or  malicious misappropriation exists, the court may
     5  award exemplary damages in an amount not exceeding twice any award  made
     6  under subdivision (a) of this section.
     7    §  279-q.  Attorney's fees. If (a) a claim of misappropriation is made
     8  or continued in bad faith, (b) a motion to terminate  an  injunction  is
     9  made  or  resisted  or continued in bad faith, or (c) a willful or mali-
    10  cious misappropriation exists, the court may award reasonable attorney's
    11  fees to the prevailing party. For purposes of this section, a  claim  of
    12  misappropriation is made or continued in bad faith or a motion to termi-
    13  nate  an  injunction is made or resisted or continued in bad faith if it
    14  is undertaken or continued solely to harass or maliciously injure anoth-
    15  er or to delay or prolong the resolution of the  litigation;  or  it  is
    16  undertaken  or continued without any reasonable basis in fact or law and
    17  could not be supported by  a  good  faith  argument  for  an  extension,
    18  modification or reversal of existing law.
    19    §  279-r.  Preservation of secrecy. In an action under this article, a
    20  court shall preserve the secrecy of an alleged trade secret  by  reason-
    21  able  means, including but not limited to, granting protective orders in
    22  connection with discovery devices pursuant to the provisions of  section
    23  thirty-one  hundred  three  of the civil practice law and rules, holding
    24  in-camera hearings, sealing the records of the action, and ordering  any
    25  person  involved  in  the  litigation  not  to disclose an alleged trade
    26  secret without prior court approval.
    27    § 279-s. Statute  of  limitations.  Notwithstanding  any  inconsistent
    28  provision  of law, an action for misappropriation must be brought within
    29  three years after the misappropriation is discovered or by the  exercise
    30  of reasonable diligence should have been discovered. For the purposes of
    31  this section, a continuing misappropriation constitutes a single claim.
    32    §  279-t.  Effect  on other law. (a) Except as provided in subdivision
    33  (b) of this section, this article displaces conflicting  tort,  restitu-
    34  tionary, and other law of this state providing civil remedies for misap-
    35  propriation of a trade secret.
    36    (b) This article does not affect:
    37    (1)  contractual  remedies, whether or not based upon misappropriation
    38  of a trade secret;
    39    (2) other civil remedies that are not based upon misappropriation of a
    40  trade secret; or
    41    (3) criminal remedies, whether or not based upon misappropriation of a
    42  trade secret.
    43    § 279-u. Uniformity of  application  and  construction.  This  article
    44  shall be applied and construed to effectuate its general purpose to make
    45  uniform the law with respect to the subject of this article among states
    46  enacting it.
    47    §  279-v. Severability. If any provision of this article or its appli-
    48  cation to any person or circumstances is held  invalid,  the  invalidity
    49  does  not  affect other provisions or applications of this article which
    50  can be given effect without the invalid provision or application, and to
    51  this end the provisions of this article are severable.
    52    § 2. Section 8303-a of the civil practice law and rules is amended  by
    53  adding a new subdivision (d) to read as follows:
    54    (d) The provisions of this section shall not apply to actions governed
    55  by article seventeen-B of the general business law.

        A. 6419                             4
     1    § 3. This act shall take effect on the one hundred eightieth day after
     2  it  shall  have become a law, except that the provisions of article 17-B
     3  of the general business law, as added by section one of this act,  shall
     4  not  apply to a misappropriation occurring prior to such effective date.
     5  With  respect  to a continuing misappropriation that began prior to such
     6  effective date, this act shall not apply to the continuing  misappropri-
     7  ation that occurs after such effective date.
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