When a departing salesperson walks out with your pricing model, or a vendor uses a process you shared in confidence, the first question is not how to sue. It is whether the information legally counts as a trade secret in the first place. In Minnesota, that question has a precise three-part answer under the Minnesota Uniform Trade Secrets Act (“MUTSA”), Minn. Stat. § 325C.01. Whether your customer list, formula, or source code qualifies rarely turns on how valuable it is. It turns on how you handled it. In my practice, the businesses that lose these disputes usually had genuinely valuable information and simply never treated it as secret.
What are the three parts of Minnesota’s trade secret test?
Under Minnesota’s Uniform Trade Secrets Act, information is a trade secret only if it satisfies three things at once. Minn. Stat. § 325C.01, subd. 5, defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives 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, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
Read practically, that is a three-part test: the information must be a qualifying type of information, it must get its economic value from not being generally known to, and not being readily ascertainable by proper means by, others who could profit from it, and you must have taken reasonable steps to keep it secret. All three are required. A formula worth millions is not a trade secret if it is published in a trade journal, and a tightly guarded document is not a trade secret if its contents are public knowledge. Minnesota’s trade secret law is a short chapter; the operative provisions run from Minn. Stat. § 325C.01 to § 325C.07 (the displacement clause itself uses that range). For the broader picture of how the Act operates, see this overview of Minnesota’s Uniform Trade Secrets Act.
What kinds of information can be a trade secret in Minnesota?
The statutory category is broad. Minn. Stat. § 325C.01, subd. 5, protects “information, including a formula, pattern, compilation, program, device, method, technique, or process.” The word that does the work is “including.” The listed types are examples, not a closed set, so the question is almost never “is a customer list the right kind of thing.” It is whether the other two parts of the test are met.
In practice, the information at issue in Minnesota trade secret disputes falls into a few recurring categories: customer information (purchasing histories, contract terms, non-public contact relationships), financial information (pricing models, cost structures, margins), technical information (manufacturing processes, formulas, algorithms, source code), and strategic information (expansion plans, acquisition targets, product roadmaps). Source code is a common one, and the security expectations courts apply to it are specific enough that source code can be a protectable trade secret only when handled with real access controls. The category alone never decides the case. Two businesses can hold the same type of customer list, and one has a trade secret while the other does not, based entirely on the value and secrecy parts of the test.
What does “independent economic value from not being generally known” mean?
This is the second part of the test, and it is about where the value comes from. Minn. Stat. § 325C.01, subd. 5, requires that the information “derives 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.” The value has to flow from the secrecy itself, not just from the information being useful. Your accounting method is useful, but if every business in your industry uses the same method, it is generally known and the value does not come from your keeping it secret.
The statute frames the value relative to a specific audience: other persons who could gain economically from disclosing or using the information, meaning competitors. The test is whether a competitor would gain an advantage from getting your information that they could not get on their own. A pricing model built from years of non-public deal data has independent economic value because a competitor cannot replicate it without the data. A price sheet posted on your website does not, because anyone can read it. The recurring pattern I see is a business assuming value alone makes information a secret. Value is necessary, but the value has to be value that exists because the information is not generally known to, and not readily ascertainable by proper means by, those competitors.
When is information “readily ascertainable” and therefore not a trade secret?
Information is not a trade secret if a competitor could lawfully obtain it without your help. Minn. Stat. § 325C.01, subd. 5, conditions protection on the information “not being generally known to, and not being readily ascertainable by proper means by,” competitors, so information a competitor could compile from public directories, published sources, or lawful observation falls outside the statutory definition. “Proper means” is the lawful side of the line; the statute’s definition of improper means at Minn. Stat. § 325C.01, subd. 2, marks the unlawful side, and anything outside that list is generally fair game.
This is why customer lists are the most contested category. A list of names a competitor could rebuild from a phone book, a trade association directory, or public filings is readily ascertainable, which places it outside the statutory definition. A list that reflects non-public information your business developed (which contacts actually buy, at what volume, on what terms, after what sales cycle) is not something a competitor can readily ascertain, and that compilation can qualify. The dividing line is the non-public effort embedded in the compilation, not the existence of a list. Whether the information could be reverse engineered or independently developed is part of the same inquiry: if a competitor can lawfully derive it, it is readily ascertainable.
What counts as reasonable efforts to maintain secrecy?
The third part asks whether you actually treated the information as secret. Minn. Stat. § 325C.01, subd. 5, requires that the information “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Because the statute makes this an independent requirement on the same footing as the value element, it is often the part that decides a disputed case: a business that never signaled the information was confidential, never restricted access, and never told employees what to protect does not satisfy the statutory secrecy-efforts requirement, even on information that would otherwise qualify. The clean-hands logic is straightforward: you cannot complain that an employee misused a secret you never treated as one.
Reasonable steps typically include confidentiality or nondisclosure agreements, access restrictions on documents and systems, marking sensitive materials, limiting disclosure on a need-to-know basis, and exit procedures that remind departing employees of their obligations. The phrase “reasonable under the circumstances” scales to the business, so a small company is not held to a Fortune 500 information-security budget; it is held to steps that are reasonable for an operation its size. The mistake I see most often is a business that has good intentions and no implementation: everyone “knew” the information was sensitive, but nothing was marked, nothing was locked down, and no agreement was signed. For a practical walkthrough of what reasonable measures look like in practice, that gap is the single most common reason an otherwise strong claim fails.
How does a trade secret get lost, and what is “improper means”?
A trade secret exists only as long as it stays secret, and it can be lost lawfully. If you disclose it publicly, or a competitor independently develops the same information, or a competitor reverse engineers your product, the information is no longer protected, and none of that is wrongdoing. Those are proper means. Liability attaches only when information that still qualifies as a trade secret is acquired or used through improper means. Minn. Stat. § 325C.01, subd. 2, defines improper means to include “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.”
The definition is the gate to everything else. Misappropriation under Minn. Stat. § 325C.01, subd. 3, only reaches a “trade secret of another,” so if the information never met the three-part test, there is no misappropriation claim no matter how the competitor got it. This is why the threshold question (does it count as a trade secret) controls the entire dispute. Subd. 3 also reaches a person who knew or had reason to know the information was “acquired under circumstances giving rise to a duty to maintain its secrecy,” which is how a former employee who took nothing improperly at the time can still be liable for later using information they had a duty to protect.
How does the federal DTSA definition compare to Minnesota’s?
The two definitions track each other closely. The federal Defend Trade Secrets Act (“DTSA”) uses a materially parallel test. Under 18 U.S.C. § 1839(3), information is a trade secret where “the owner thereof has taken reasonable measures to keep such information secret” and “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.” That is the same reasonable-measures-plus-value-from-secrecy structure as Minnesota’s Act, so information that qualifies under MUTSA will usually qualify under the DTSA as well.
The practical difference is forum, not definition. The DTSA opens a federal court door: under 18 U.S.C. § 1836(b)(1), “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.” Most Minnesota businesses meet that interstate-commerce connection, which means the same misappropriation can often be brought under state law, federal law, or both. Whether a federal filing is the right move is a strategy question, not a definitional one; this analysis of when a federal claim under the DTSA fits walks through that choice.
What protection do you have if your information is not a trade secret?
You may still have a contract claim, and that path is independent of the trade secret definition. Minn. Stat. § 325C.07 provides that the Act displaces “conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret,” but it expressly does not affect “contractual remedies, whether or not based upon misappropriation of a trade secret.” In plain terms: the statute can knock out a common-law misappropriation theory if the information does not meet the definition, but it leaves your contracts intact.
That carve-out is why a well-drafted nondisclosure or confidentiality agreement is the backbone of information protection, not a backup to it. A signed agreement can protect information that is valuable but readily ascertainable, or sensitive but not handled carefully enough to clear the secrecy element, because the obligation comes from the contract rather than from the statutory definition. This matters more after Minnesota’s 2023 limits on noncompete agreements pushed employers toward confidentiality and non-solicitation terms instead; for what that shift leaves you, see what still protects your secrets after Minnesota’s 2023 noncompete limits. The lesson for most business owners is to not let the trade secret question be the only line of defense. Build the contract first, then treat the statutory protection as a second, automatic layer that applies if the information also qualifies.
Is my customer list a trade secret in Minnesota?
It depends on the list and how you handled it. A list a competitor could rebuild from public directories is readily ascertainable and not protected. A curated list reflecting non-public buying history, pricing, or contacts, kept under access controls, can qualify under the Minnesota Uniform Trade Secrets Act.
Does a trade secret have to be written down?
No. Minnesota law protects information without requiring a fixed medium. A process or method kept in employees’ heads can qualify. But unwritten secrets are harder to prove and harder to show you took reasonable steps to protect, which the statute requires, so most businesses commit key secrets to controlled documents.
Can a former employee use my customer information from memory?
Memorizing it does not strip trade secret status. If the information still meets the three-part test and the employee owed a duty to keep it secret, using it can be misappropriation under Minnesota law whether it left on paper or in the employee’s memory. Proof is harder without a document trail.
Can a competitor legally reverse engineer my product?
Generally yes. Reverse engineering and independent development are proper means under Minnesota law, not misappropriation. If a competitor lawfully figures out your secret, you lose trade secret protection as to that information. This is one reason patents and signed confidentiality agreements matter alongside secrecy.
Do I still have a claim if my information is not a trade secret?
Possibly, through contract. Minnesota’s trade secret statute preserves contractual remedies whether or not information qualifies as a trade secret. A signed nondisclosure or confidentiality agreement can reach information that fails the statutory definition, even where a tort misappropriation claim would not.
The trade secret question in Minnesota is mechanical, not mysterious. Information qualifies only if it is the right kind of information, it gets its value from being secret rather than generally known or readily ascertainable, and you actually took reasonable steps to keep it secret, all under Minn. Stat. § 325C.01. The part most businesses control and most often neglect is the third one. Pair the statutory protection with a signed confidentiality agreement so a contract claim survives even if the information falls outside the definition. If you want a second set of eyes on whether specific information would qualify and how to shore up the gaps, our business trade secret practice can help, and you can also see what a trade secret claim can actually recover once misappropriation is proven. For a practical read on your own situation, email [email protected] with a brief description and any relevant documents.
