When Minnesota made employee non-competes void — for agreements entered into on or after July 1, 2023 — a great many employers concluded they had lost their protection and a great many departing employees concluded they were now free to do anything.
Both conclusions are wrong, and the reason is Minnesota’s Uniform Trade Secrets Act, Minn. Stat. ch. 325C. (That is the statutory short title: § 325C.08 provides that “[s]ections 325C.01 to 325C.07 may be cited as the ‘Uniform Trade Secrets Act.’”) It was untouched by the non-compete ban, it does not depend on any agreement the employee signed, and its remedies include exemplary damages and attorney’s fees.
For most Minnesota businesses, trade secret law is now the main event rather than the backstop.
What qualifies as a trade secret in Minnesota?
Two elements, and the second one is where most claims fail. Under § 325C.01, subd. 5, a trade secret is:
[I]nformation, 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.
Element one — independent economic value from secrecy. The information must be valuable because others do not have it. Note the two halves of that clause: not generally known and not readily ascertainable by proper means. The second half is an independent hurdle, and it is frequently the one that kills a claim. Information a competitor could assemble from public sources, published specifications, or a reverse-engineered sample is readily ascertainable, and it does not become a trade secret because your company found it expensive to compile.
Element two — reasonable efforts to maintain secrecy. This is the one that decides cases. Information the company treated as ordinary is not a trade secret no matter how valuable it turns out to be. A customer list emailed around without restriction, stored on an open share, and never mentioned in any policy is not protected simply because losing it hurt.
One useful counterweight for owners: the statute adds that a trade secret’s existence “is not negated merely because an employee or other person has acquired the trade secret without express or specific notice that it is a trade secret if, under all the circumstances, the employee or other person knows or has reason to know that the owner intends or expects the secrecy of the type of information comprising the trade secret to be maintained.” Labeling helps; its absence is not automatically fatal.
The practical test: could you show a judge what you did to keep it secret, before this dispute existed?
What is misappropriation?
Section 325C.01, subd. 3, defines it in two branches.
Acquisition — obtaining a trade secret from someone else “by a person who knows or has reason to know that the trade secret was acquired by improper means.”
Disclosure or use — disclosing or using another’s trade secret “without express or implied consent” by a person who used improper means to learn it, or who knew or had reason to know that their knowledge came from improper means, from someone under a duty to keep it secret, or from someone who owed the claimant such a duty. One path inside that branch is easy to miss: it also reaches a person who, “before a material change of the discloser’s or user’s position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.” An email sent to the wrong address does not become yours to exploit.
Consent is an element, not a footnote. If the owner authorized the use — expressly or by implication from the parties’ course of dealing — there is no misappropriation under this branch.
“Improper means” is defined to include “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.”
Two consequences follow that people miss:
No agreement is required. A departing employee who takes proprietary information is liable under the statute whether or not they ever signed anything.
The recipient can be liable too. A new employer who knows or should know the information was improperly obtained is exposed. This is why sophisticated companies quarantine incoming hires from competitor materials — the exposure runs to the hiring company, not just the individual.
The remedies
| Section | Remedy |
|---|---|
| § 325C.02 | Injunctive relief — “Actual or threatened misappropriation may be enjoined” |
| § 325C.03(a) | Actual loss plus the unjust enrichment not taken into account in computing actual loss — or, “[i]n lieu of damages measured by any other methods,” a reasonable royalty for the unauthorized disclosure or use |
| § 325C.03(b) | Exemplary damages for willful and malicious misappropriation — discretionary, on top of the paragraph (a) award, “in an amount not exceeding twice any award made under paragraph (a)” |
| § 325C.04 | Reasonable attorney’s fees to the prevailing party — for a claim made in bad faith, for a motion to terminate an injunction made or resisted in bad faith, or for willful and malicious misappropriation |
| § 325C.06 | Three years from when the misappropriation was discovered or by the exercise of reasonable diligence should have been discovered |
Get the exemplary-damages structure right. It is not compensatory damages or exemplary damages. Section 325C.03(b) provides that “[i]f willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under paragraph (a).” So it is additive, it is discretionary, and it is capped at two times the compensatory award — which means a plaintiff whose compensatory proof is thin has a small multiplier to double.
Note the shape of the fee provision. Section 325C.04 runs to the “prevailing party,” and its first trigger is “a claim of misappropriation … made in bad faith.” Trade secret litigation is expensive on both sides, and the fee exposure runs in both directions. A company that files a misappropriation suit as a competitive weapon is exposed to the same statute it invoked.
Note also “threatened” misappropriation in § 325C.02. Relief does not require waiting for the damage.
And note the second sentence of the limitations section, because it closes a door. Section 325C.06 provides: “For the purposes of this section, a continuing misappropriation constitutes a single claim.” The clock does not restart with each new use of the same secret. A plaintiff who discovered the taking four years ago cannot revive the claim by pointing to the defendant’s use last month.
The federal overlay
The Defend Trade Secrets Act, 18 U.S.C. § 1836, created a federal civil cause of action in 2016 and applies independently of Minnesota law. It provides a federal forum without needing diversity, and it includes an ex parte seizure remedy for extraordinary circumstances.
The DTSA also contains a whistleblower-immunity provision that employers must give notice of in agreements governing trade secrets. 18 U.S.C. § 1833(b)(3)(A): “An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.”
That notice requirement is missed constantly in employment and confidentiality agreements. Three things about the consequence, because it is routinely overstated:
- The penalty is targeted, not global. Under § 1833(b)(3)(C), an employer that does not comply “may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.” It does not disable those remedies against a new employer, a competitor, or any other defendant — and it does not touch compensatory damages or injunctive relief against anyone.
- Compliance can be by cross-reference. Section 1833(b)(3)(B) treats an employer as compliant “if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of law.” That is how most agreements actually satisfy it.
- It applies prospectively. Section 1833(b)(3)(D): the paragraph “shall apply to contracts and agreements that are entered into or updated after the date of enactment of this subsection” — the DTSA was enacted May 11, 2016.
Most serious cases are pleaded under both statutes.
Where the non-compete ban leaves everyone
| Tool | Status |
|---|---|
| Employee non-compete | Void under Minn. Stat. § 181.988 if entered into on or after July 1, 2023. The statute is prospective — 2023 c 53 art 6 s 1 provides that it “is effective July 1, 2023, and applies to contracts and agreements entered into on or after that date.” Older agreements remain subject to common-law reasonableness review |
| Confidentiality / NDA | Expressly outside the non-compete definition — § 181.988, subd. 1(a) |
| Trade secret claim | Fully intact — ch. 325C, no agreement required |
| Customer non-solicitation | Expressly outside the non-compete definition — § 181.988, subd. 1(a). Whether a given clause is enforceable is a separate, fact-specific question |
| No-hire clause binding a service provider’s customer | Void under Minn. Stat. § 181.9881, subd. 2, for agreements entered into on or after July 1, 2024 |
| Owner covenant on sale of a business | Expressly permitted, if temporary and geographically restricted |
That fifth row is the one employers miss. Minn. Stat. § 181.9881 (2024 c 110 art 2 s 12) provides at subdivision 2(a): “No service provider may restrict, restrain, or prohibit in any way a customer from directly or indirectly soliciting or hiring an employee of a service provider.” Subdivision 2(b) makes an offending provision void and unenforceable, and subdivision 2(c) requires the service provider to notify its employees. Subdivision 3 exempts certain software-consulting placements. If you are a staffing agency or managed-services provider whose master services agreement bars the client from hiring your people, that clause is the subject of a statute — separate from the non-compete ban. For the wider question of what an employer may still rely on now that covenants not to compete are void, see what replaced the non-compete.
We wrote about the non-compete ban itself here.
The strategic shift is from restricting where a person may work to protecting what they may take. That is a narrower tool, and in some ways a better one — it protects the actual asset rather than the person’s livelihood, and it does not require anyone to sign anything.
What “reasonable efforts” actually looks like
The statute asks whether the information “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” That is a fact question, and these are the measures that make it provable — none of them exotic:
- Written confidentiality policy that employees acknowledge, with the DTSA immunity notice included.
- Access controls. Not everyone needs everything. Restriction is evidence.
- Marking. Label confidential documents as confidential. It is nearly free and disproportionately persuasive.
- Exit procedures. Return-of-property certification, device collection, and prompt credential revocation. Revoke access on the day of departure, not the following month.
- Vendor and partner NDAs before disclosure, not after.
- Segregation of the genuinely secret. A company claiming everything is a trade secret often ends up protecting nothing, because the claim reads as unserious.
If you think information has been taken
Preserve first. Device images, access logs, email and file-transfer records, badge data. This evidence has a short and often automatic lifespan, and reconstructing it later is expensive or impossible.
Then move quickly. Injunctive relief depends on urgency, and a company that waited six months has undermined its own theory of irreparable harm.
Identify what was taken with specificity. A claim framed as “our confidential information” gives a court nothing to enjoin and nothing to test against the statutory definition. The pricing model, the specific customer file, the source code module — that is what a viable claim looks like.
Send a preservation letter to the individual and the new employer — which also starts the clock on the new employer’s knowledge, an important element for its own exposure.
If you are the departing employee or the hiring employer
Take nothing. Not the customer list, not the pricing sheet, not “my own” contacts file, not the deck you built. The non-compete being void does not make the files yours.
Return everything and document that you did.
Do not forward company material to a personal account. This single act appears in nearly every misappropriation case that goes badly, and it is almost always visible in the logs.
Hiring employers: quarantine. Written instructions not to bring or use former-employer material, no access to competitor documents, and a documented onboarding process. The company’s exposure is independent of the individual’s.
The larger point
Minnesota made a coherent choice. Going forward — for agreements entered into on or after July 1, 2023 — it stopped letting employers restrict where people may work, and it left fully intact the law protecting what those employers actually built.
That is the more defensible line, and it happens to be the one that rewards businesses that took their own information seriously before anything went wrong.
Madgett Law, LLC handles Minnesota trade secret disputes on both sides — emergency injunctive relief, misappropriation claims and defense, and the confidentiality architecture that makes a claim viable before it is needed. If information has walked out the door, or you have been accused of taking it, the first 72 hours matter. Send us a message or call 612-470-6529.
Sources: Minn. Stat. ch. 325C (Uniform Trade Secrets Act; short title, § 325C.08), including § 325C.01 (definitions of “improper means,” “misappropriation,” and “trade secret” at subds. 2, 3, and 5), § 325C.02 (injunctive relief), § 325C.03 (damages, reasonable royalty, and exemplary damages capped at twice the paragraph (a) award), § 325C.04 (attorney’s fees), and § 325C.06 (three-year limitations period; continuing misappropriation is a single claim). Minn. Stat. § 181.988, enacted 2023 c 53 art 6 s 1 (effective July 1, 2023, and applicable to contracts and agreements entered into on or after that date); Minn. Stat. § 181.9881, enacted 2024 c 110 art 2 s 12 (effective July 1, 2024, and applicable to contracts and agreements entered into on or after that date). Minnesota sources retrieved from the Minnesota Office of the Revisor of Statutes. 18 U.S.C. § 1836 (Defend Trade Secrets Act) and § 1833(b)(3) (immunity notice requirement), Pub. L. 114-153 (May 11, 2016).
This article is general legal information about Minnesota and federal law, not legal advice, and reading it does not create an attorney–client relationship. Whether particular information qualifies as a trade secret depends entirely on its value, whether it is readily ascertainable by proper means, and the measures taken to protect it. No outcome is promised or implied.