On January 9, 2012, New Jersey Governor Chris Christie signed into law the New Jersey Trade Secrets Act (NJTSA), which makes New Jersey the 47th state in the nation to adopt a statutory scheme based on the Uniform Trade Secrets Act (U.T.S.A.) for the protection of trade secrets. Only New York, Massachusetts, and Texas do not have a statute modeled on the U.T.S.A.

While the NJTSA introduces a statutory framework governing trade secret protection, in many respects it does no more than codify existing case law. The statute provides trade secret owners with a civil claim for trade secret misappropriation, and several important remedies. It also specifies certain defenses that may not be asserted by trade secret defendants and sets forth procedures to be followed by courts in trade secret litigation.

Some of the highlights of the NJTSA include available remedies of injunctive relief, damages for actual loss and unjust enrichment, limited punitive damages and attorney’s fees for willful and malicious misappropriation or bad faith misappropriation claims. Also, it includes a three year statute of limitations commencing when the misappropriation was discovered or should have been discovered with reasonable diligence; this is down from six years under prior law. In this way, New Jersey follows many other jurisdictions in codifying the importance to owners of trade secrets of not sitting on their rights.

One question that remains open, however, is whether New Jersey will continue to recognize the doctrine of inevitable disclosure. This doctrine, which has been prohibited as a basis for relief under the trade secret act of some other states, e.g., California, and restricted in many others, e.g., Ohio, allows the imposition of an injunction in the absence of evidence that the former employee is actually using the trade secrets of his or her former employer, if disclosure of the former employer’s trade secrets is inevitable and other circumstances apply.

The New Jersey statute expressly states that “actual” or “threatened” misappropriation may be enjoined, perhaps signaling that New Jersey may follow some other jurisdictions in prohibiting or limiting claims based merely on “inevitable disclosure” of trade secrets. This, however, seems unlikely in light of the holdings of Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 (3rd Cir. 2010) and National Starch and Chemical Corp. v. Parker Chemical Corp., 219 N.J. Super. 158 (App. Div. 1987). In Bimbo Bakeries, the court permitted injunctive relief for “inevitable disclosure” of trade secrets based on Pennsylvania’s statutory language permitting injunctions for “threatened” not just “actual” misappropriation. And, in National Starch, the court adopted the common law doctrine of “inevitable disclosure” in the absence of a specific trade secret act in New Jersey.

In IDT Corp. v. Unlimited Recharge, Inc., 2011 WL 6020571, 8 (D.N.J.) (D.N.J.,2011), the District Court refused to enjoin alleged misappropriation on the theory of inevitable disclosure because the plaintiffs there failed to allege what it was they sought to protect with sufficient particularity. In footnote 7 of the opinion, however, the District Court questioned the viability of plaintiffs’ reliance on a theory of “inevitable disclosure”, determining that it did not need to reach that question due to the infirmity of plaintiff’s injunction application on the grounds mentioned above.

It remains to be seen whether the new NJTSA will alter New Jersey common law, but in the meantime, defendants may argue that “inevitable disclosure” is not, or should no longer be, recognized in New Jersey.