Trade secret
A trade secret protects confidential information that derives economic value from its secrecy, codified in France by the French Trade Secrets Act of 30 July 2018 and in the United States by the Defend Trade Secrets Act (DTSA) of 11 May 2016.
Definition
The trade secret is defined in France by the French Trade Secrets Act of 30 July 2018 (Law no. 2018-670), transposing EU Directive 2016/943 and codified at articles L151-1 et seq. of the French Commercial Code. It protects any information that is not generally known, has commercial value because it is secret and is subject to reasonable measures to preserve its confidentiality. In the United States, the Defend Trade Secrets Act of 11 May 2016 (18 U.S.C. § 1836) adds a federal civil cause of action on top of the Uniform Trade Secrets Act, adopted by 48 states. Protection has no time limit so long as the information remains secret, unlike patents (20 years) or copyright (70 years post mortem).
In plain English
Anything you do not patent and do not want to see copied may qualify as a trade secret: proprietary algorithms, customer lists, formulas, manufacturing processes, technical parameters, AI training data. But protection is not automatic: you must prove reasonable confidentiality measures (signed NDAs, restricted access, CONFIDENTIAL marking, internal policies). Without that, a French court or a U.S. federal court will deny protection. The DTSA also lets you sue in U.S. federal court, obtain injunctions and, in extreme cases, secure an ex parte seizure: the immediate seizure of property from a trade-secret thief before any hearing (18 U.S.C. § 1836(b)(2)). It is the most powerful weapon in U.S. IP law.
RWM transatlantic case study
For a French startup opening a U.S. office and entrusting its source code to U.S. developers, we build a four-layer architecture: separate French and U.S. NDAs, a documented internal confidentiality policy, an IP assignment agreement signed by each employee and contractor, and an explicit DTSA reference in the U.S. employment contract. The DTSA requires this explicit notice (the Notice provision at 18 U.S.C. § 1833(b)(3)) for the employer to recover exemplary damages and attorney's fees. Without it, the federal cause of action remains available but the maximum recovery is capped. On the French side, sanctions for violations can reach twice the profit derived by the infringer (article L152-6 of the French Commercial Code), with an expedited référé procedure to obtain immediate cessation of the harm.
Points to watch
- Documented reasonable confidentiality measures are essential, otherwise no protection.
- DTSA Notice provision required in any U.S. contract to unlock exemplary damages.
- Potentially unlimited duration, unlike patents, so long as the secret remains.
- DTSA ex parte seizure: a rare and powerful federal civil weapon, to be used with care.
- In an M&A context, due diligence must verify that an effective protection policy exists.