WPI 351.05 Independent Economic Value—Definition

This instruction should be used with WPI 351.02 (Trade Secret—Definition). Not all of the factors in the second paragraph might apply to a particular case, and other factors—or no specific factors at all—might be appropriate to assure that the instruction does not constitute a comment on the evidence by emphasizing some factors disproportionately.

The Uniform Trade Secrets Act does not define “independent economic value.” Nevertheless, in order for information to qualify as a trade secret, 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.” RCW 19.108.010(4)(a). In determining whether information has “independent economic value” under the Uniform Trade Secrets Act, most courts look to whether the information confers a “competitive advantage” upon the plaintiff. Nelson & Fisher, Am. Bar Ass'n Section of Litigation, Model Jury Instructions: Business Torts Litigation § 8.3.3 (4th ed. 2005), and cases cited therein. See also cases collected in Unif. Trade Secrets Act with 1985 Amendments § 1, Notes of Decisions n.46, 14 U.L.A. (2005).

This is consistent with the common law rule that only those secrets affording a competitive advantage may properly be considered trade secrets. See Restatement (Third) of Unfair Competition § 39 (1995) (“A trade secret is any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.”).

In related contexts, courts interpreting RCW 19.108.010(4) (definition of trade secret) have also emphasized the importance of the competitive advantage that arises from knowledge of a trade secret. For example, in Buffets, Inc. v. Klinke, 73 F.3d 965, 968–69 (9th Cir. 1996), the plaintiff was held not to have established “independent economic value” simply by showing competitors' lack of success, when there was “no demonstrated relationship” between their lack of success and the unavailability of the alleged trade secret.

In Ed Nowogroski Ins., Inc. v. Rucker, 137 Wn.2d 427, 437, 971 P.2d 936 (1999), the court noted that “[w]here [a] former employee seeks to use the trade secrets of the former employer in order to obtain a competitive advantage, then competitive activity can be enjoined or result in an award of damages.” See also Boeing Co. v. Sierracin Corp., 108 Wn.2d 38, 52, 738 P.2d 665 (1987) (holding that confidential information did not lose its trade secret status upon submission to the FAA, as the information submitted was exempt from public disclosure “because it could substantially harm the competitive position of the entity … required to submit [it]”).

“In determining whether information has ‘independent economic value’ under the Uniform Trade Secrets Act, one of the key factors used by the courts is the effort and expense that was expended on developing the information.” Ed Nowogroski, 137 Wn.2d at 438; see Pacific Aerospace & Elecs., Inc. v. Taylor, 295 F.Supp.2d 1205, 1214–15 (E.D. Wash. 2003) (defendant attributed economic value to the information and did not compile it from allegedly available public sources). But even in a setting where the assertedly secret information was collected fairly easily, the court still concluded it possessed independent economic value because it was shown to have marketing value and not to be readily ascertainable by competitors. Lyft, Inc. v. City of Seattle, 190 Wn.2d 769, 783, 418 P.3d 102 (2018) (zip code reports for Lyft rides determined to be the proper subject of trade secret claim).

Other courts have identified the following factors that a court may examine to determine whether information derives independent economic value from not being generally known or readily ascertainable:

See Spottiswoode v. Levine, 1999 ME 79, ¶ 27 n.6, 730 A.2d 166, 174 n.6, and cases cited therein.

For another phrasing of factors to consider, see Nelson & Fisher, Am. Bar Ass'n Section of Litigation, Model Jury Instructions: Business Torts Litigation § 8.3.3 (4th ed. 2005).

Precision Moulding & Frame, Inc. v. Simpson Door Co., 77 Wn.App. 20, 26, 888 P.2d 1239 (1995). That is, the “existence of a trade secret [is] measured by the accessibility of the information within a given industry.” Precision, 77 Wn.App. at 26–27.