How Long Should a Trade-Secret Confidentiality Obligation Last?

How long should a confidentiality obligation for trade secrets last?

Federal and state trade-secret law define a trade secret by two conditions that are about secrecy, not time: the owner takes reasonable measures to keep the information secret, and the information has independent economic value because it is not generally known. Nothing in the definition sets a term of years.

“the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information”

Because protection is measured by status rather than by a clock, a status-bounded clause — protecting the information for so long as it remains a trade secret — tracks that outer limit exactly: it never expires early while the secret (and the law's protection) is still alive, and it never claims more than the law gives. That is the formulation the model survival clause in the OpenAgreements confidentiality and invention-assignment agreement uses. A shorter fixed term is a perfectly valid alternative — see below.

Can you use a fixed term, like two or three years, instead?

Trade-secret protection ends only when the information stops being secret — when it becomes generally known or readily ascertainable. Until then the law keeps protecting it, so a short fixed term simply chooses to give that protection up early.

“If the information has become readily ascertainable from public sources so that no significant benefit accrues to a person who relies instead on other means of acquisition, the information is in the public domain and no longer protectable under the law of trade secrets.”

The mirror image matters too: protection is not lost merely because time passes on the contract — it is lost when secrecy is lost. A status-bounded clause asks is it still a secret?; a fixed term answers a different question — how many years do we want to commit to? Both are legitimate drafting choices; they simply optimize for different things.

Why not just make it indefinite or perpetual for everything?

The problem is not perpetuity as such — a genuine trade secret can be protected indefinitely because it stays secret. The problem is a bare indefinite obligation that is not tied to trade-secret status and reaches far beyond real secrets. In Brown v. TGS Management, a California appellate court held that confidentiality provisions broad enough to bar the employee from his profession functioned as an unlawful restraint on competition.

“Collectively, these overly restrictive provisions operate as a de facto noncompete provision; they plainly bar Brown in perpetuity from doing any work in the securities field, much less in his chosen profession of statistical arbitrage.”

The First Circuit reached a parallel result in TLS Management v. Rodríguez-Toledo, refusing to enforce non-disclosure agreements that were not confined to protectable trade secrets.

“We reverse because TLS failed to satisfy its burden to prove the existence of trade secrets, and because the nondisclosure agreements are so broad as to be unenforceable.”

How aggressively a court polices this varies by jurisdiction — the risk is sharpest where state policy strongly disfavors restraints on competition, as in California — but the cure is the same everywhere: bound the obligation. A reasonable fixed term is one way to bound it; tying it to trade-secret status is the other, and the one that also preserves the full life of a genuine secret. A clause that protects information for so long as it remains a trade secret is bounded by the very thing the law protects — so it can last as long as the secret does without collapsing into a non-compete.

Is this rule uniform across the country?

Because the federal and uniform definitions share the same secrecy-based test, a status-bounded confidentiality clause tracks the law in nearly every U.S. jurisdiction at once, which is why it does not need to be tuned state by state.

“An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.”

Two jurisdictions sit outside the Uniform Trade Secrets Act: New York applies common-law trade-secret doctrine, and North Carolina protects trade secrets under its own Trade Secrets Protection Act. Both still condition protection on continued secrecy, so the status-bounded formulation remains the sound choice in every U.S. jurisdiction.

What does the enforceability-safe clause look like?

This is the formulation the OpenAgreements confidentiality and invention-assignment agreement uses: its survival clause runs trade-secret confidentiality for so long as the information remains a trade secret under applicable law, rather than defaulting the trade-secret track to a bare fixed term or a bare indefinite one. That gives the trade-secret holder the full lawful protection without over-reaching — it does not lapse while the secret is still valuable, and it does not sweep so broadly that a court recasts it as an unbounded restraint on competition. From there it is a business call: floor the trade-secret track with a minimum number of years (whichever is longer) if you want a guaranteed commitment, or use a plain fixed term — still enforceable — if you would rather cap your own exposure.

“the owner thereof has taken reasonable measures to keep such information secret”

A drafting note on remedies versus contract: the Uniform Trade Secrets Act rule that an injunction ends when the secret ceases to exist is about court-ordered relief, not the wording of your clause. But it reflects the same underlying principle — the law protects the information only while it is secret — so writing the contract to the same trigger keeps the obligation aligned with what a court will actually enforce.