1. Senate Bill No. 375–Senator Schneider

CHAPTER........

AN ACT relating to trade secrets; prohibiting certain acts related to trade secrets; authorizing

a court to award exemplary damages in certain circumstances; clarifying certain

means that a court may use to preserve the secrecy of an alleged trade secret;

providing a penalty; and providing other matters properly relating thereto.

 

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. Chapter 600A of NRS is hereby amended by adding thereto

a new section to read as follows:

A person who, with intent to injure an owner of a trade secret or with

reason to believe that his actions will injure an owner of a trade secret,

without limitation:

1. Steals, misappropriates, takes or conceals a trade secret or obtains

a trade secret through fraud, artifice or deception;

2. Wrongfully copies, duplicates, sketches, draws, photographs,

alters, destroys, photocopies, replicates, transmits, delivers, sends, mails,

communicates or conveys a trade secret;

3. Receives, buys or possesses a trade secret with knowledge or

reason to know that the trade secret was obtained as described in

subsection 1 or 2;

4. Attempts to commit an offense described in subsection 1, 2 or 3;

5. Solicits another person to commit an offense described in

subsection 1, 2 or 3; or

6. Conspires to commit an offense described in subsection 1, 2 or 3,

and one of the conspirators performs an act to further the conspiracy,

is guilty of a category C felony and shall be punished by imprisonment in

the state prison for a minimum term of not less than 1 year and a

maximum term of not more than 10 years and may be further punished

by a fine of not more than $10,000.

Sec. 2. NRS 600A.030 is hereby amended to read as follows:

  1. 600A.030 As used in this chapter, unless the context otherwise
  1. requires:
  1. 1. "Improper means" includes [theft, bribery, misrepresentation,
  1. breach] , without limitation:
  1. (a) Theft;
  1. (b) Bribery;
  1. (c) Misrepresentation;
  1. (d) Willful breach or willful inducement of a breach of a duty to
  1. maintain secrecy [, and espionage] ;
  1. (e) Willful breach or willful inducement of a breach of a duty imposed
  1. by common law, statute, contract, license, protective order or other court
  1. or administrative order; and
  2. (f) Espionage through electronic or other means.
  1. 2. "Misappropriation" means:
  1. (a) Acquisition of the trade secret of another by a person by improper
  1. means;
  1. (b) Acquisition of a trade secret of another by a person who knows or
  1. has reason to know that the trade secret was acquired by improper means;
  1. [(b)] or
  1. (c) Disclosure or use of a trade secret of another without express or
  1. implied consent by a person who:
  1. (1) Used improper means to acquire knowledge of the trade secret;
  1. (2) At the time of disclosure or use, knew or had reason to know that
  1. his knowledge of the trade secret was:
  1. (I) Derived from or through a person who had used improper
  1. means to acquire it;
  1. (II) Acquired under circumstances giving rise to a duty to maintain
  1. its secrecy or limit its use; or
  1. (III) Derived from or through a person who owed a duty to the
  1. person seeking relief to maintain its secrecy or limit its use; or
  1. (3) Before a material change of his position, knew or had reason to
  1. know that it was a trade secret and that knowledge of it had been acquired
  1. by accident or mistake.
  1. 3. "Owner" means the person who holds legal or equitable title to a
  1. trade secret.
  1. 4. "Person" means a natural person, corporation, business trust, estate,
  1. trust, partnership, association, joint venture, government, governmental
  1. subdivision or agency, or any other legal or commercial entity.

[4.] 5. "Trade secret" means information, including , without

limitation, a formula, pattern, compilation, program, device, method,

technique [or process,] , product, system, process, design, prototype,

procedure, computer programming instruction or code that:

(a) Derives independent economic value, [present] actual or potential,

from not being generally known to, and not being readily ascertainable by

proper means by [,] the public or any other persons who can obtain

commercial or economic value from its disclosure or use; and

(b) Is the subject of efforts that are reasonable under the circumstances

to maintain its secrecy.

Sec. 3. NRS 600A.040 is hereby amended to read as follows:

  1. 600A.040 1. Actual or threatened misappropriation may be enjoined.
  1. Upon application to the court, an injunction must be terminated when the
  1. trade secret has ceased to exist, but the injunction may be continued for an
  1. additional reasonable period of time [in order] to eliminate commercial or
  1. other advantage that otherwise would be derived from the
  1. misappropriation.
  1. 2. In exceptional circumstances, an injunction may condition future use
  1. upon payment of a reasonable royalty for no longer than the period of time
  1. for which use could have been prohibited. Exceptional circumstances
  2. include a material and prejudicial change of position before acquiring
  1. knowledge or reason to know of misappropriation that renders a prohibitive
  1. injunction inequitable.
  1. 3. In appropriate circumstances, the court may order affirmative acts to
  1. protect a trade secret.

Sec. 4. NRS 600A.050 is hereby amended to read as follows:

  1. 600A.050 1. Except to the extent that a material and prejudicial
  1. change of position before acquiring knowledge or reason to know of
  1. misappropriation renders a monetary recovery inequitable, a complainant is
  1. entitled to recover damages for misappropriation. Damages include both
  1. loss caused by misappropriation and unjust enrichment caused by
  1. misappropriation that is not taken into account in computing the loss. In
  1. lieu of damages measured by any other methods, damages caused by
  1. misappropriation may be measured by imposition of liability for a
  1. reasonable royalty for a misappropriator’s unauthorized disclosure or use of
  1. a trade secret.
  1. 2. If willful [and malicious misappropriation] , wanton or reckless
  1. misappropriation or disregard of the rights of the owner of the trade
  1. secret exists, the court may award exemplary damages in an amount not
  1. exceeding twice the award made under subsection 1.

Sec. 5. NRS 600A.070 is hereby amended to read as follows:

600A.070 In [an action under this chapter,] any civil or criminal

action, the court shall preserve the secrecy of an alleged trade secret by

reasonable means, which may include [granting] , without limitation:

1. Granting protective orders in connection with discovery

proceedings [, holding] ;

2. Holding hearings in camera [, sealing] ;

3. Sealing the records of the action [, and ordering] ;

4. Determining the need for any information related to the trade

secret before allowing discovery;

5. Allowing the owner of the trade secret to obtain a signed

agreement of confidentiality from any party who obtains knowledge of

the trade secret;

6. Ordering a person who obtains knowledge of the trade secret to

return to the owner of the trade secret any writing which reflects or

contains the trade secret; and

7. Ordering any person involved in the litigation not to disclose an

alleged trade secret without previous court approval.

Sec. 6. NRS 600A.090 is hereby amended to read as follows:

  1. 600A.090 1. Except as otherwise provided in subsection 2, this
  1. chapter displaces conflicting tort, restitutionary, and other law of this state
  1. providing civil remedies for misappropriation of a trade secret.
  1. 2. This chapter does not affect:
  1. (a) Contractual remedies, whether or not based upon misappropriation
  1. of a trade secret;
  2. (b) Other civil remedies that are not based upon misappropriation of a
  1. trade secret; or
  1. (c) [Criminal] Except as otherwise provided in section 1 of this act,
  1. criminal sanctions, whether or not based upon misappropriation of a trade
  1. secret.

Sec. 7. NRS 600A.020 is hereby repealed.

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