How to Protect Your Business’s Trade Secrets in Oregon

What Is Oregon Trade Secret Law? (And Why It’s Overlooked)

Trade secrets are among the most valuable forms of intellectual property for modern businesses. But despite their value and range of applicability they remain one of the most mysterious parts of intellectual property. They are hardly mentioned and sometimes conspicuously absent from most discussions of intellectual property to the point that it almost seems serendipitous that the name contains the word ‘secret.’

Unlike patents, copyrights, and trademarks, trade secrets do not depend on public registration or disclosure for their value; making them surprisingly accessible. Instead, the value of trade secrets arises from their secrecy. A company could invest years developing things such as manufacturing processes, customer databases, pricing strategies, business methods, or other kinds of information that have commercial value. If the company’s competitors were to obtain and use that information, the economic consequences could be considerable. Enter: Trade Secrets.

Statutory Framework

Oregon protects such information chiefly through its version of the Uniform Trade Secrets Act (UTSA), codified as Oregon Revised Statutes (ORS) 646.461 through 646.475. This range of statutes is essentially part of the chapter governing Trade Practices and Antitrust Regulation in Oregon. The chapter establishes what constitutes a trade secret, defines misappropriation, and provides civil remedies. Importantly though, it also provides that the provisions should be interpreted to promote uniformity among states that have adopted the federal Uniform Trade Secrets Act (UTSA). Basically, creating a legal floor for interstate commerce. This is obviously important because trade-secret disputes frequently involve businesses, employees, and competitors operating across state lines.

If your first question before clicking on this article was, “what’s a trade secret?” the short answer is that it is a type of information that contains two key components: secrecy and misappropriation. Secrecy for how it is created, and misappropriation for how it is legally enforced. Therefore, the central provision in the chapter is ORS 646.461 which defines both “trade secret” and “misappropriation.”

Under the statute, a trade secret is information that satisfies two requirements. First, the information must derive actual or potential independent economic value from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use. Second, the information must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy. This basically means that it must be information that 1) has independent economic value due to its secrecy, and 2) you have to take reasonable steps to keep it secret. The statute also expressly identifies numerous possible forms of information which can be trade secrets, of which there are a lot, including drawings, cost data, customer lists, formulas, patterns, compilations, computer programs, devices, methods, techniques, and processes.

It is important to remember that information only becomes a trade secret upon it becoming a secret, and that the form of the secrecy must be reasonable. The definition therefore contains an important balance. Merely calling information “confidential” or “proprietary” does not automatically make it a trade secret. Instead, the information must have economic value because it is not generally known, and the owner must take reasonable steps to preserve its secrecy. At the same time, Oregon law does not require absolute secrecy. The statutory test is reasonableness under the circumstances.

What Qualifies as a Trade Secret in Oregon?

As we already established, trade secrets are information. But what kind of information exactly? Oregon courts have emphasized that whether information qualifies as a trade secret is generally fact dependent. For instance, in Kaib’s Roving R.PH. Agency, Inc. v. Smith, the Oregon Court of Appeals explained that information must gain value because it is not generally known and must be subject to reasonable efforts to maintain secrecy. The court considered factors such as whether information is known within the relevant industry, whether it has additional value because it is secret, and what efforts were made to protect it as questions of fact.

This approach is important because information can be commercially valuable without being legally protected as a trade secret. For example, a business’s general knowledge of who its customers are may be widely available within an industry. In such circumstances, the customer identities themselves may not satisfy the statutory definition. By contrast, a carefully compiled list or database containing nonpublic customer preferences, purchasing histories, pricing information, buying schedules, or other particular or specialized information may have independent economic value specifically because competitors cannot readily obtain it.

The Oregon Court of Appeals addressed this distinction in another case: Peterson Machinery Co. v. May. In this case, an employee left one heavy-machinery company for a competitor. The former employer alleged that the employee had taken and used customer information and other business information. The court concluded that the employer had not produced sufficient evidence to establish that the mere identities of its customers were trade secrets. The relevant market was small, and many customers were already known to competing businesses.

The Peterson Machinery case demonstrates that the existence of confidentiality policies alone is not enough. An employer may label a customer list confidential, but the statutory question remains whether the information actually derives independent economic value from being unknown and whether reasonable efforts were made to preserve its secrecy. The case importantly illustrates the difference between simple contractual confidentiality and statutory trade-secret protection.

Reasonable Efforts to Maintain Secrecy

The second major component of Oregon’s definition is the requirement that the owner make reasonable efforts to maintain secrecy. The law does not prescribe one mandatory security system. Instead, reasonableness depends on the circumstances.

Mostly, the form that reasonable efforts will take will depend greatly on the form of the information itself. But the classic example of this is a list in a safe. A list can be one of a kind and so can a key, and a safe makes retrieval of the list easy and exclusive. This is only to say that you probably need not go to the trouble of purchasing an armored car if your information is stored electronically and even if you did it might not make enough sense to be considered reasonable.

Oregon businesses can strengthen trade-secret protection through fairly simple measures such as confidentiality agreements, employee policies, restricted access to databases, password protection, access controls, confidentiality markings, employee training, and procedures governing the return or destruction of confidential information when employment ends. These measures serve both a practical and evidentiary purpose. They help keep the information secret while also demonstrating that the business genuinely treated the information as secret. In fact, a lot of Oregon businesses are probably not even aware they have trade secrets because of practices they already employ.

An important Oregon, case, Pelican Bay Forest Products, Inc. v. Western Timber Products, Inc., illustrates the importance of these measures. The case involved a lumber company’s customer information. An employee had agreed to confidentiality obligations concerning the company’s customer list, and the company had taken additional steps to remind him of those obligations. The Oregon Court of Appeals ruled in the case that the evidence was sufficient to create a factual issue concerning whether the customer information qualified as a trade secret.

The important distinction is that Oregon’s “reasonable efforts” requirement is flexible rather than absolute. A company does not necessarily lose protection merely because information is accessible to several employees. Nor does it necessarily obtain protection merely by putting the word “confidential” on a document. Courts examine the totality of the circumstances. This is why if you have questions about whether your methods satisfy the standard for reasonable efforts you should consult an attorney.

Misappropriation

Misappropriation is where the rubber meets the road when it comes to Trade Secret protection. If the reason to keep information private is because it is valuable, then by nature it is valuable to others, and those others will likely try to discover and use it. How they obtain the information and use it belongs to the analysis of misappropriation.

Even when information qualifies as a trade secret, the plaintiff must establish misappropriation. ORS 646.461 defines several forms of prohibited conduct. Misappropriation can occur when a person acquires a trade secret while knowing or having reason to know that it was obtained through improper means. It can also occur when someone discloses or uses a trade secret without consent under certain circumstances which are specified by the statute.

Through this statute, Oregon defines “improper means” broadly, which includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, and electronic or other espionage. These are pretty straight forward and easy to understand as improper since they involve deceit and other forms of dishonesty. Following this same logic, importantly, reverse engineering and independent development, standing alone, are expressly excluded from the definition of improper means.

A helpful example to illustrate this distinction would be a famous recipe such as the Coca-Cola recipe. Recipes are famously difficult to patent due to several factors. However, all one needs to do for trade secret protection is take reasonable steps to maintain its secrecy. Irrespective of what methods are implemented, it is still possible for a chef or a chemist to deduce the recipe through dissection of the product and some trial & error. To do so would not be misappropriation under Oregon law, just good old-fashioned competition.

The distinction between improper acquisition and lawful competition is crucial. Trade-secret law does not prohibit competitors from developing their own products, conducting legitimate research, or using information that is generally available. Instead, its purpose is to prevent unfair acquisition, disclosure, or use of genuinely protected secret information.

The earlier mentioned Pelican Bay case also demonstrates that a defendant’s initial acquisition and then later use may have different individual legal consequences. In Pelican Bay the defendants argued that they did not initially know that the customer information had been improperly obtained. The court nevertheless held that continued use after the defendants received cease-and-desist letters could support a finding of misappropriation. This is important because once the defendants had reason to know that the information came from an individual who owed a duty of confidentiality, they were therefore on notice that continued use could constitute misappropriation under ORS 646.461(2)(d)(C).

The important takeaway is Oregon law recognizes that knowledge of information can change over time. Conduct that begins innocently does not necessarily remain legally innocent after a person receives information establishing that the material is confidential and was obtained from someone under a duty to protect it.

Remedies for Misappropriation

A successful legal action brought against a party for misappropriation of a trade secret will ultimately come to the issue of remedies for the affected party, and Oregon law provides several. Under ORS 646.463, actual or even threatened misappropriation may be enjoined by a court. Meaning that courts may actually intervene not only after economic damage has occurred but also to prevent threatened misuse. Courts may also require affirmative acts from parties in appropriate circumstances.

In Oregon, damages for misappropriation of trade secrets are governed principally by ORS 646.465. A successful plaintiff is entitled to damages adequate to compensate for the misappropriation. Depending on the circumstances, the court can address losses suffered by the trade-secret owner and benefits improperly obtained by the defendant. As usual in civil matters, the availability and calculation of damages depend on the evidence presented in each particular case.

Attorney fees are also addressed by ORS 646.467. The statute permits fee awards in specified circumstances, including where a trade-secret claim is made in bad faith or where other statutory requirements are satisfied. The possibility of awarding attorney fees makes the litigation of trade-secret claims particularly consequential because both plaintiffs and defendants can face significant litigation costs if forced to pay the other side’s fees. For example, in Pelican Bay the trial court had originally awarded attorney fees to the defendants after granting summary judgment, but the Court of Appeals later reversed the underlying trade-secret ruling and therefore consequently reversed the fee award. Thus, while attorney fees are not outcome determinative, the inclusion of them certainly raises the stakes of the litigation and can ultimately be a major factor in the final result.

Employee Mobility and Competition

I want to briefly touch on an important and common dynamic where trade secret law comes into play frequently, and that is in employment situations. Employment situations provide a common example of the dynamics of how trade secret law works and how the ultimate goal is to foster healthy and fair competition. To this end, trade-secret law must balance two competing interests: protecting businesses from unfair appropriation while allowing employees to change jobs and compete lawfully. Oregon’s decisions emphasize that employees do not automatically lose the ability to use their general knowledge, skills, experience, and legitimate professional relationships simply because they previously worked for a competitor.

The case of Peterson Machinery is particularly instructive here. The Oregon Court of Appeals recognized that an employee’s memory and professional relationships are not automatically equivalent to misappropriation of trade secrets. The court had previously held in Pelican Bay that information can qualify as a trade secret even when memorized, but that does not mean every piece of information remembered by a former employee is protected. In Peterson Machinery, the evidence did not establish that the employee’s recollection and subsequent customer contacts constituted use or disclosure of protected trade secrets.

The push and pull of this distinction is to encourage legitimate competition. An employer cannot transform all knowledge acquired during employment into a trade secret simply by declaring it confidential. At the same time, an employee cannot lawfully take genuinely protected confidential information and use it for a competitor merely because the employee remembers it.

Conclusion

Trade secrets are a strangely overlooked form of intellectual property. Oregon businesses would be smart to take inventory on what information has particular value to them and be sure that the correct steps are being taken to maintain its secrecy. The good news is you might already be meeting these conditions. The inside tip is that if the information does get misappropriated, you might have a claim under Oregon law that you are forgetting to add.

Remember, a trade secret must have independent economic value because it is not generally known and must be protected through reasonable efforts to maintain its secrecy. Misappropriation means someone improperly acquires, discloses, or uses the information without permission.

For Oregon businesses, the most important practical lesson is that trade-secret protection begins before litigation. Companies should identify genuinely sensitive information, limit access to it, establish appropriate confidentiality policies and agreements, and consistently enforce those policies. Employees and competitors, meanwhile, must distinguish between lawful use of general knowledge and experience and unlawful use of protected trade secrets.

Ultimately, Oregon’s trade-secret laws seek to protect the economic value created by secrecy while fostering fair market competition. Because it continues to remain an overlooked portion of intellectual property by so many Oregon businesses that keep it in mind might find an edge above the competition.