Trade Secrets In New Jersey Are Won Or Lost On Proof, Not Labels

Trade Secrets In New Jersey Are Won Or Lost On Proof, Not Labels

New Jersey businesses say “that is confidential” every day. In court, that phrase does not carry a case. Trade secret claims succeed when a company can show, with admissible evidence, that the information stayed secret for a reason, and that the company treated it as secret in a consistent, disciplined way. Trade secret claims fail at summary judgment when the record shows loose practices, informal controls, and a lack of documentation that proves the business actually guarded the information.

Summary judgment is a procedural step in which a judge decides whether a reasonable jury could find for the plaintiff based on the evidence. Trade secret cases are routinely decided there, not because secrecy is difficult, but because the plaintiff cannot prove secrecy with the kind of operational records courts expect to see.

The New Jersey Trade Secrets Act Sets The Two Proof Problems You Must Solve

New Jersey adopted the Uniform Trade Secrets Act through the New Jersey Trade Secrets Act, N.J.S.A. 56:15-1 through 56:15-9. The statute’s definition is the heart of most summary judgment motions. To qualify as a trade secret under N.J.S.A. 56:15-2, the information must satisfy two requirements: (1) it must derive independent economic value from not being generally known or readily ascertainable by proper means, and (2) it must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Those two requirements are not academic. They are evidentiary targets. A defendant moving for summary judgment attacks one or both and argues that the plaintiff has no real proof that the information stayed secret, or no proof that the secrecy created economic value, or both. Courts focus on what the company did in the real world, not what the company calls the information in pleadings or internal emails.

What Summary Judgment Looks Like In Real Trade Secret Litigation

At summary judgment, the plaintiff cannot rely on conclusory statements such as “this was confidential” or “employees understood it was private.” The plaintiff needs concrete evidence that can be introduced at trial, and that evidence needs to show a consistent pattern of secrecy measures over time. When the evidence shows that there was no meaningful effort to keep the information confidential, New Jersey courts grant summary judgment in favor of the trade secret claimant.

This is where business owners get surprised. They assume the information is secret because they never intended to share it publicly. Courts look for the steps that convert intention into protection. The absence of those steps gives a defendant a clean argument that no reasonable jury could find the information qualifies as a trade secret after the fact.

Step One Is Identification With Real Particularity

A trade secret claim can collapse before the court even reaches “reasonable efforts” if the company cannot define what the trade secret is with workable specificity. Broad categories like “customer information,” “pricing,” or “processes” are not sufficient when the record shows they contain a mix of ordinary business material and truly sensitive material. Courts expect the plaintiff to isolate the protected material so the court can evaluate it and the defendant can defend against it.

In practice, that means the company should be able to point to a defined set of information and describe it in a way that distinguishes it from general know-how. Litigation involving trade secrets often turns into a fight over whether the plaintiff is trying to protect a real secret or an entire business category after the relationship has already broken down.

Step Two Is Access Control That Matches Your Org Chart, Not Your Hopes

Courts look hard at who had access and whether access was truly limited on a need-to-know basis. If the information was available to wide groups of employees without functional restriction, the defense argument writes itself: the company did not treat the information as secret, so it cannot ask the court to treat it as a trade secret after the fact.

Businesses that survive these challenges can usually show role-based access controls, password-protected systems, access logs for sensitive repositories, and a documented process for removing access when employment ends. These details matter because they produce records. Records become exhibits. Exhibits defeat summary judgment.

Step Three Is Written Confidentiality Obligations With Teeth

Signed confidentiality agreements with employees and key business partners are not a magic shield, but they are strong evidence of “reasonable efforts” when they are paired with real operational safeguards. A company that relies on verbal understandings, informal reminders, or a general sense that “everyone knows this is private” is giving the defense a serious opening.

In employee cases, courts frequently see a paper trail that includes non-disclosure agreements, invention assignment provisions, and restrictive covenant language. In disputes involving vendors, consultants, and collaborators, courts expect the company to have contractual confidentiality language that fits the relationship and is actually used, not just buried in an unused template.

Step Four Is Policy, Training, And Enforcement That You Can Prove

A written policy helps, but a policy without training and enforcement can look like window dressing. Courts want to see that the company treated confidentiality as an operational discipline. The best evidentiary posture comes from a routine pattern: onboarding acknowledgments, periodic training, reminders tied to access privileges, and real consequences when violations occur.

This does not require perfection. It requires consistency that can be shown in documents and testimony. A company that never disciplines misuse, never documents reminders, and never audits access is setting itself up for a summary judgment argument that “reasonable efforts” are missing.

Step Five Is Segregation And Marking That Supports The Secrecy Story

Labeling documents as confidential is not required under the statute, but it becomes persuasive when it aligns with actual segregation of sensitive material. Courts tend to take the secrecy claim more seriously when trade secret repositories are separate from general shared drives, when folders are access-restricted, and when exports and downloads are tracked for sensitive data sets.

Marking is valuable because it creates an objective signal that the company treated the information as special. Segregation is valuable because it creates a technical barrier. Barriers and signals create proof.

Step Six Is Exit Procedures That Assume A Dispute Is Coming

Departures are where trade secrets walk. New Jersey courts scrutinize what the company did when an employee left, especially in competitive departures. A business that does not retrieve devices, does not disable access immediately, and does not obtain a written exit certification that company information has been returned is creating a factual mess that will show up in discovery and then in the summary judgment record.

Strong exit procedures create clear evidence. Device return logs, access revocation timestamps, written reminders of continuing confidentiality obligations, and follow-up letters when warning signs appear can be the difference between surviving summary judgment and losing the case before trial.

Under New Jersey law, the governing definition of a trade secret is set forth in N.J. Stat. Ann. § 56:15-2. The statute defines a “trade secret” as information held by one or more persons, without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype, or process that meets two conditions: 1. Economic Value: The information must derive 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. 2. Reasonable Secrecy Measures: The information must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The Common Summary Judgment Losses Are Predictable And Avoidable

Trade secret claims most often fail at summary judgment for reasons that are easy to describe and painful to litigate around. The information turns out to be readily ascertainable from public sources or ordinary industry practice, which undercuts the “independent economic value from secrecy” element. The company cannot identify the trade secret with workable precision, so the court is left with a broad category rather than a defined secret. The company allowed widespread internal access with no meaningful controls. The company relied on oral understandings rather than written obligations. The company had no enforcement history, which makes the secrecy measures look optional rather than real. When the record looks like that, a defense summary judgment motion becomes a serious threat.

Trade secret decisions granting summary judgment frequently turn on the absence of meaningful confidentiality efforts, which is exactly the kind of fact pattern businesses need to prevent before a dispute begins.

What This Means For Business Owners Who Want Trade Secret Protection That Holds Up In Court

A business does not “decide” in litigation that it has trade secrets. A business either built trade secret protection into its daily operations, or it did not. The court will measure the claim against the company’s own habits. The companies that survive summary judgment usually have a record of deliberate secrecy over time: defined trade secret inventories, tight access controls, signed confidentiality obligations, training and enforcement, segregated storage, and disciplined exit processes. That evidence allows a judge to say a jury can decide the issue, which is the entire point of defeating a summary judgment motion.

If your business has valuable know-how, pricing structures, customer data, technical methods, or internal processes that you would not want in a competitor’s hands, the best time to protect that information is before a dispute begins. Litigation is a poor time to start building a record that should have existed all along.

Final Thoughts

Trade secret litigation in New Jersey rewards businesses that can prove secrecy as an operational fact. Courts do not require perfection. Courts do require proof. If the goal is to preserve trade secret status and survive summary judgment, the work is mostly practical: define the secret, limit access, bind people in writing, train and enforce, segregate sensitive material, and run disciplined exits.

Contact us today to discuss your business or legal matter. Put our 20+ years of legal experience to work for you.

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For detailed insights and legal assistance on topics discussed in this post, including litigation, contact the Law Offices of Peter J. Lamont at our Bergen County Office. We're here to answer your questions and provide legal advice. Contact us at (201) 904-2211 or email us at  info@pjlesq.com.

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About Peter J. Lamont, Esq.

Peter J. Lamont is a nationally recognized attorney with significant experience in business, contract, litigation, and real estate law. With over two decades of legal practice, he has represented a wide array of businesses, including large international corporations. Peter is known for his practical legal and business advice, prioritizing efficient and cost-effective solutions for his clients.

Peter has an Avvo 10.0 Rating and has been acknowledged as one of America's Most Honored Lawyers since 2011. 201 Magazine and Lawyers of Distinction have also recognized him for being one of the top business and litigation attorneys in New Jersey. His commitment to his clients and the legal community is further evidenced by his active role as a speaker, lecturer, and published author in various legal and business publications.

As the founder of the Law Offices of Peter J. Lamont, Peter brings his Wall Street experience and client-focused approach to New Jersey, offering personalized legal services that align with each client's unique needs and goals​.

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