The New York State Senate

                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2468

                       2019-2020 Regular Sessions

                            I N  S E N A T E

                            January 25, 2019
                               ___________

Introduced  by Sens. SANDERS, SEPULVEDA -- read twice and ordered print-
  ed, and when printed to be committed 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:

  Section 1. The general business law is amended by adding a new article
17-B to read as follows:
                              ARTICLE 17-B
                        UNIFORM TRADE SECRETS ACT
SECTION 279-M. SHORT TITLE.
        279-N. DEFINITIONS.
        279-O. INJUNCTIVE RELIEF.
        279-P. DAMAGES.
        279-Q. ATTORNEY'S FEES.
        279-R. PRESERVATION OF SECRECY.
        279-S. STATUTE OF LIMITATIONS.
        279-T. EFFECT ON OTHER LAW.
        279-U. UNIFORMITY OF APPLICATION AND CONSTRUCTION.
        279-V. SEVERABILITY.
  § 279-M. SHORT TITLE. THIS ARTICLE SHALL  BE  KNOWN  AS  THE  "UNIFORM
TRADE SECRETS ACT".
  §  279-N.  DEFINITIONS.  AS  USED  IN THIS ARTICLE, UNLESS THE CONTEXT
REQUIRES OTHERWISE:
  (A)  "IMPROPER  MEANS"  INCLUDES  THEFT,  BRIBERY,  MISREPRESENTATION,
BREACH OR INDUCEMENT OF A BREACH OF A DUTY TO MAINTAIN SECRECY, OR ESPI-
ONAGE THROUGH ELECTRONIC OR OTHER MEANS;
  (B)  "MISAPPROPRIATION"  MEANS:  (1)  ACQUISITION OF A TRADE SECRET OF
ANOTHER BY A PERSON WHO KNOWS OR HAS  REASON  TO  KNOW  THAT  THE  TRADE
SECRET  WAS  ACQUIRED  BY IMPROPER MEANS; OR (2) DUPLICATING, SKETCHING,
DRAWING, PHOTOGRAPHING, DOWNLOADING,  UPLOADING,  CONCEALING,  ALTERING,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD00849-01-9

S. 2468                             2

DESTROYING,  REPLICATING,  TRANSMITTING,  DELIVERING,  SENDING, MAILING,
COMMUNICATING, OR CONVEYING A TRADE SECRET WITHOUT AUTHORIZATION; OR (3)
RECEIVING, BUYING, OR POSSESSING A TRADE SECRET,  KNOWING  THE  SAME  TO
HAVE BEEN STOLEN OR APPROPRIATED, OBTAINED, OR CONVERTED WITHOUT AUTHOR-
IZATION;  OR  (4) DISCLOSURE OR USE OF A TRADE SECRET OF ANOTHER WITHOUT
EXPRESS OR IMPLIED CONSENT BY A PERSON WHO:
  (I) USED IMPROPER MEANS TO ACQUIRE KNOWLEDGE OF THE TRADE SECRET; OR
  (II) AT THE TIME OF DISCLOSURE OR USE, KNEW OR HAD REASON TO KNOW THAT
HIS OR HER KNOWLEDGE OF THE TRADE SECRET WAS:
  (A) DERIVED FROM OR THROUGH A PERSON WHO HAD UTILIZED  IMPROPER  MEANS
TO ACQUIRE IT;
  (B) ACQUIRED UNDER CIRCUMSTANCES GIVING RISE TO A DUTY TO MAINTAIN ITS
SECRECY OR LIMIT ITS USE; OR
  (C)  DERIVED  FROM  OR  THROUGH A PERSON WHO OWED A DUTY TO THE PERSON
SEEKING RELIEF TO MAINTAIN ITS SECRECY OR LIMIT ITS USE; OR
  (III) BEFORE A MATERIAL CHANGE OF HIS OR HER  POSITION,  KNEW  OR  HAD
REASON  TO  KNOW THAT IT WAS A TRADE SECRET AND THAT KNOWLEDGE OF IT HAD
BEEN ACQUIRED BY ACCIDENT OR MISTAKE;
  (C) "PERSON" MEANS A NATURAL PERSON,  CORPORATION,  LIMITED  LIABILITY
COMPANY,  BUSINESS TRUST, ESTATE, TRUST, PARTNERSHIP, ASSOCIATION, JOINT
VENTURE, GOVERNMENT, GOVERNMENTAL SUBDIVISION OR AGENCY,  OR  ANY  OTHER
LEGAL OR COMMERCIAL ENTITY; AND
  (D)  "TRADE  SECRET"  MEANS  ANY FORM AND TYPE OF FINANCIAL, BUSINESS,
SCIENTIFIC, TECHNICAL, ECONOMIC, OR ENGINEERING INFORMATION, INCLUDING A
PATTERN, PLAN, COMPILATION, PROGRAM DEVICE, FORMULA, DESIGN,  PROTOTYPE,
METHOD,  TECHNIQUE, PROCESS, PROCEDURE, PROGRAM, OR CODE, WHETHER TANGI-
BLE OR INTANGIBLE, AND WHETHER OR HOW STORED, COMPILED, OR  MEMORIALIZED
PHYSICALLY, ELECTRONICALLY, GRAPHICALLY, PHOTOGRAPHICALLY OR IN WRITING,
THAT:
  (1)  DERIVES INDEPENDENT ECONOMIC VALUE, ACTUAL OR POTENTIAL, FROM NOT
BEING GENERALLY KNOWN TO, AND NOT BEING READILY ASCERTAINABLE BY  PROPER
MEANS  BY,  OTHER PERSONS WHO CAN OBTAIN ECONOMIC VALUE FROM ITS DISCLO-
SURE OR USE; AND
  (2) IS THE SUBJECT OF EFFORTS THAT ARE REASONABLE  UNDER  THE  CIRCUM-
STANCES TO MAINTAIN ITS SECRECY.
  §  279-O. INJUNCTIVE RELIEF. (A) ACTUAL OR THREATENED MISAPPROPRIATION
MAY BE TEMPORARILY, PRELIMINARILY, OR PERMANENTLY ENJOINED. UPON  APPLI-
CATION  TO  THE  COURT,  AN  INJUNCTION  SHALL BE VACATED WHEN THE TRADE
SECRET HAS CEASED TO EXIST, BUT THE INJUNCTION MAY BE CONTINUED  FOR  AN
ADDITIONAL  REASONABLE  PERIOD  OF TIME IN ORDER TO ELIMINATE COMMERCIAL
ADVANTAGE THAT OTHERWISE WOULD BE DERIVED FROM THE MISAPPROPRIATION.
  (B) IN EXCEPTIONAL CIRCUMSTANCES, AN INJUNCTION MAY  CONDITION  FUTURE
USE  UPON  PAYMENT OF A REASONABLE ROYALTY FOR NO LONGER THAN THE PERIOD
OF TIME FOR WHICH USE COULD HAVE BEEN  PROHIBITED.  EXCEPTIONAL  CIRCUM-
STANCES  INCLUDE,  BUT  ARE  NOT  LIMITED TO, A MATERIAL AND PREJUDICIAL
CHANGE OF POSITION PRIOR TO ACQUIRING KNOWLEDGE OR  REASON  TO  KNOW  OF
MISAPPROPRIATION THAT RENDERS A PROHIBITIVE INJUNCTION INEQUITABLE.
  (C) IN APPROPRIATE CIRCUMSTANCES, THE COURT MAY ORDER AFFIRMATIVE ACTS
TO PROTECT A TRADE SECRET.
  §  279-P. DAMAGES. (A) EXCEPT TO THE EXTENT THAT A MATERIAL AND PREJU-
DICIAL CHANGE OF POSITION PRIOR TO ACQUIRING KNOWLEDGE OR REASON TO KNOW
OF MISAPPROPRIATION RENDERS A MONETARY RECOVERY INEQUITABLE, A COMPLAIN-
ANT IS ENTITLED TO RECOVER DAMAGES  FOR  MISAPPROPRIATION.  DAMAGES  CAN
INCLUDE  BOTH  THE ACTUAL LOSS CAUSED BY MISAPPROPRIATION AND THE UNJUST
ENRICHMENT CAUSED BY MISAPPROPRIATION THAT IS NOT TAKEN INTO ACCOUNT  IN
COMPUTING ACTUAL LOSS. IN LIEU OF DAMAGES MEASURED BY ANY OTHER METHODS,

S. 2468                             3

THE  DAMAGES CAUSED BY MISAPPROPRIATION MAY BE MEASURED BY IMPOSITION OF
LIABILITY FOR A REASONABLE ROYALTY FOR A MISAPPROPRIATOR'S  UNAUTHORIZED
DISCLOSURE OR USE OF A TRADE SECRET.
  (B)  IF  WILLFUL  OR  MALICIOUS MISAPPROPRIATION EXISTS, THE COURT MAY
AWARD EXEMPLARY DAMAGES IN AN AMOUNT NOT EXCEEDING TWICE ANY AWARD  MADE
UNDER SUBDIVISION (A) OF THIS SECTION.
  §  279-Q.  ATTORNEY'S FEES. IF (A) A CLAIM OF MISAPPROPRIATION IS MADE
OR CONTINUED IN BAD FAITH, (B) A MOTION TO TERMINATE  AN  INJUNCTION  IS
MADE  OR  RESISTED  OR CONTINUED IN BAD FAITH, OR (C) A WILLFUL OR MALI-
CIOUS MISAPPROPRIATION EXISTS, THE COURT MAY AWARD REASONABLE ATTORNEY'S
FEES TO THE PREVAILING PARTY. FOR PURPOSES OF THIS SECTION, A  CLAIM  OF
MISAPPROPRIATION IS MADE OR CONTINUED IN BAD FAITH OR A MOTION TO TERMI-
NATE  AN  INJUNCTION IS MADE OR RESISTED OR CONTINUED IN BAD FAITH IF IT
IS UNDERTAKEN OR CONTINUED SOLELY TO HARASS OR MALICIOUSLY INJURE ANOTH-
ER OR TO DELAY OR PROLONG THE RESOLUTION OF THE  LITIGATION;  OR  IT  IS
UNDERTAKEN  OR CONTINUED WITHOUT ANY REASONABLE BASIS IN FACT OR LAW AND
COULD NOT BE SUPPORTED BY  A  GOOD  FAITH  ARGUMENT  FOR  AN  EXTENSION,
MODIFICATION OR REVERSAL OF EXISTING LAW.
  §  279-R.  PRESERVATION OF SECRECY. IN AN ACTION UNDER THIS ARTICLE, A
COURT SHALL PRESERVE THE SECRECY OF AN ALLEGED TRADE SECRET  BY  REASON-
ABLE  MEANS, INCLUDING BUT NOT LIMITED TO, GRANTING PROTECTIVE ORDERS IN
CONNECTION WITH DISCOVERY DEVICES PURSUANT TO THE PROVISIONS OF  SECTION
THIRTY-ONE  HUNDRED  THREE  OF THE CIVIL PRACTICE LAW AND RULES, HOLDING
IN-CAMERA HEARINGS, SEALING THE RECORDS OF THE ACTION, AND ORDERING  ANY
PERSON  INVOLVED  IN  THE  LITIGATION  NOT  TO DISCLOSE AN ALLEGED TRADE
SECRET WITHOUT PRIOR COURT APPROVAL.
  § 279-S. STATUTE  OF  LIMITATIONS.  NOTWITHSTANDING  ANY  INCONSISTENT
PROVISION  OF LAW, AN ACTION FOR MISAPPROPRIATION MUST BE BROUGHT WITHIN
THREE YEARS AFTER THE MISAPPROPRIATION IS DISCOVERED OR BY THE  EXERCISE
OF REASONABLE DILIGENCE SHOULD HAVE BEEN DISCOVERED. FOR THE PURPOSES OF
THIS SECTION, A CONTINUING MISAPPROPRIATION CONSTITUTES A SINGLE CLAIM.
  §  279-T.  EFFECT  ON OTHER LAW. (A) EXCEPT AS PROVIDED IN SUBDIVISION
(B) OF THIS SECTION, THIS ARTICLE DISPLACES CONFLICTING  TORT,  RESTITU-
TIONARY, AND OTHER LAW OF THIS STATE PROVIDING CIVIL REMEDIES FOR MISAP-
PROPRIATION OF A TRADE SECRET.
  (B) THIS ARTICLE DOES NOT AFFECT:
  (1)  CONTRACTUAL  REMEDIES, WHETHER OR NOT BASED UPON MISAPPROPRIATION
OF A TRADE SECRET;
  (2) OTHER CIVIL REMEDIES THAT ARE NOT BASED UPON MISAPPROPRIATION OF A
TRADE SECRET; OR
  (3) CRIMINAL REMEDIES, WHETHER OR NOT BASED UPON MISAPPROPRIATION OF A
TRADE SECRET.
  § 279-U. UNIFORMITY OF  APPLICATION  AND  CONSTRUCTION.  THIS  ARTICLE
SHALL BE APPLIED AND CONSTRUED TO EFFECTUATE ITS GENERAL PURPOSE TO MAKE
UNIFORM THE LAW WITH RESPECT TO THE SUBJECT OF THIS ARTICLE AMONG STATES
ENACTING IT.
  §  279-V. SEVERABILITY. IF ANY PROVISION OF THIS ARTICLE OR ITS APPLI-
CATION TO ANY PERSON OR CIRCUMSTANCES IS HELD  INVALID,  THE  INVALIDITY
DOES  NOT  AFFECT OTHER PROVISIONS OR APPLICATIONS OF THIS ARTICLE WHICH
CAN BE GIVEN EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION, AND TO
THIS END THE PROVISIONS OF THIS ARTICLE ARE SEVERABLE.
  § 2. Section 8303-a of the civil practice law and rules is amended  by
adding a new subdivision (d) to read as follows:
  (D) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ACTIONS GOVERNED
BY ARTICLE SEVENTEEN-B OF THE GENERAL BUSINESS LAW.

S. 2468                             4

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