Senate Bill 2229

AN ACT TO AMEND SECTION 75-26-3, MISSISSIPPI CODE OF 1972, TO REVISE DEFINITIONS AND THE MISSISSIPPI UNIFORM TRADE SECRETS ACT; TO AMEND SECTION 75-26-5, MISSISSIPPI CODE OF 1972, TO CLARIFY WHEN INJUNCTIVE RELIEF IS APPROPRIATE; TO AMEND SECTION 75-26-9, MISSISSIPPI CODE OF 1972, TO ALLOW A COURT AWARD OF REASONABLE EXPENSES TO THE PREVAILING PARTY IN ADDITION TO ATTORNEY'S FEES; TO AMEND SECTION 75-26-11, MISSISSIPPI CODE OF 1972, TO CLARIFY THE NECESSITY OF PRESERVATION OF SECRECY DURING LITIGATION; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 75-26-3, Mississippi Code of 1972, is amended as follows:

75-26-3. As used in this chapter, unless the context requires otherwise:

(a) "Improper means" includes theft; bribery; misrepresentation; breach or inducement of a breach of a duty to maintain secrecy arising out of a fiduciary, employment, or other confidential relationship; * * * espionage through electronic or other means; or breach or inducement of a breach of a duty imposed by common law, statute, contract, license, protective order, or other court or administrative order. Reverse engineering of a trade secret not acquired by conduct otherwise constituting misappropriation shall not be considered improper means.

(b) "Misappropriation" means:

(i) 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

(ii) Disclosure or use of a trade secret of another without express or implied consent by a person who:

1. Used improper means to acquire knowledge of the trade secret; or

2. At the time of disclosure or use, knew or had reason to know that his 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 limits its use; or

3. 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, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision or agency or any other legal or commercial entity.

(d) "Trade secret" means information, without regard to form, including, but not limited to, a formula, pattern, compilation, program, computer software, algorithm, computer programming instruction or code, prototype, composition of matter, device, method, technique, design, improvement, procedure, recipe, model, drawing, process, financial plan, product plan, list of actual or potential customers or suppliers, or technical and financial data, that:

(i) 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 disclosure or use, and

(ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The existence of a trade secret is not negated merely because an employee or other person has acquired the trade secret without express or specific notice that it is a trade secret if, under all the circumstances, the employee or other person knows or has reason to know that the owner intends or expects the secrecy of the type of information comprising the trade secret to be maintained.

SECTION 2. Section 75-26-5, Mississippi Code of 1972, is amended as follows:

75-26-5. (1) Actual or threatened misappropriation may be enjoined. Upon application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in appropriate circumstances for reasons including, but not limited to, an elimination of commercial advantage that otherwise would be derived from the misappropriation or where the trade secret ceases to exist due to the fault of the enjoined party or others by improper means.

(2) In exceptional circumstances, if the court determines that it would be unreasonable to prohibit future use, 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 circumstances 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. The alleged wrongful user shall bear the burden of proof of exceptional circumstances.

(3) In appropriate circumstances, affirmative acts to protect a trade secret may be compelled by court order.

SECTION 3. Section 75-26-9, Mississippi Code of 1972, is amended as follows:

75-26-9. If (a) a claim of misappropriation is made in bad faith, (b) a motion to terminate an injunction is made or resisted in bad faith or (c) willful and malicious misappropriation exists, the court may award reasonable attorney's fees and expenses to the prevailing party.

SECTION 4. Section 75-26-11, Mississippi Code of 1972, is amended as follows:

75-26-11. (1) In any civil or criminal action, a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings, 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. The disclosure or publication of a trade secret in a court proceeding or as a result thereof shall not continue an abandonment of the secret.

(2) In any action where discovery is sought of information demonstrated to be a trade secret, before ordering discovery the court shall first determine whether there is a substantial need by the party seeking discovery for the information. "Substantial need" as used in this section means:

(a) The allegations in the pleadings or motions setting forth the factual predicate for or against liability have been stated with particularity;

(b) The information sought is relevant to the allegations stated with particularity in the pleadings or motions;

(c) The information is such that the proponent of the discovery will be substantially prejudiced if not permitted access to the information; and

(d) A good-faith basis exists for the belief that testimony based on or evidence deriving from the trade secret information will be admissible at trial.

(3) Any court order directing the disclosure of trade secret information shall be appealable pursuant to Rule 5 of the Mississippi Rules of Appellant Procedure, and the order shall be stayed until the resolution of the petition or appeal.

SECTION 5. This act shall take effect and be in force from and after July 1, 2011.