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Santa on sleigh

Is Santa’s North Pole Operation a Trade Secret? Defining Trade Secrets and Confidential Information

Santa has a big operation to accomplish every year that involves a lot of work from his business (The North Pole). What are his business secrets? And are his secrets protected?

Under state law, there is no single definition of a trade secret. Most states have enacted a version (modified or unmodified) of the Uniform Trade Secrets Act (UTSA) that includes a definition of a trade secret. The UTSA is model legislation that states can use to create their own state statute. In most instances, states have adopted the UTSA with little or no change.

The UTSA defines a trade secret as information, such as a formula, pattern, compilation, program device, method, technique, or process, that is both:

  • Valuable because of secrecy. A trade secret is something that is or potentially could be economically valuable at least in part because it is not known by others, or able to be discerned by others, who otherwise could benefit economically from using or disclosing it.
  • Protected by efforts to maintain secrecy. A trade secret must be protected by reasonable efforts to maintain its secrecy from others.

The model UTSA has been broadly incorporated into US law. The District of Columbia, the US Virgin Islands, and all states except New York have adopted a version of the model statute.

Trade secret protection extends to information that is a secret and has economic value because of its secret status.

To help keep information secret, knowledge of trade secrets should be confined to those who “need to know.” Anyone with access to trade secret information (employees, as well as contractors, vendors, and business partners) should be prohibited from disclosing the information to others. Ideally, employers impose this requirement by contract.

If the secrecy of information has been diminished, courts may decline to recognize it as a trade secret. For example, information may not be a trade secret it if is:

  • Generally available. Information that is generally available or readily ascertainable is not secret, and therefore not a trade secret. For example, information may initially be secret, but then may lose its secrecy and its potential for trade secret protection if it becomes publicly available in the marketplace. In addition, information may be readily ascertainable if it can be reverse engineered. For example, a product that can be easily taken apart and duplicated may not be entitled to trade secret protection.
  • Used in the industry. Information that is generally used by others in the same industry is probably not a secret, and therefore unlikely to be afforded trade secret status (unless it is collected or assembled in a unique way). Companies should determine what similar products, processes, or ideas are already used in their industry to realistically assess their ability to protect their information as a trade secret.
  • Outdated. If the information is no longer valuable, courts are unlikely to recognize the information as a trade secret. Information that is outdated by subsequent business developments may be a secret, but since it derives no independent economic value from being maintained as a secret, it cannot be a trade secret. Keep in mind that rapidly evolving technological developments may retain trade secret status for less time than more traditional trade secrets, like the formula for Coke or Pepsi.

When applying all of that to Santa Claus, the first question is to determine what exactly his trade secrets are. One potential trade secret is the method by which he travels around the entire globe in just one night without being seen. Whether he uses some technology to stop/slow down time, or a cloaking device to prevent being seen, that method could likely be considered a trade secret. It is not readily ascertainable and not readily known. The secrecy behind how Santa does it makes it even more valuable both to Santa’s business and to any potential competitor. Another potential trade secret could include the compilation known as his “naughty and nice” list.

Santa appears to keep those potential secrets well protected, as there does not appear to be anything similar on the market. No other company or individual has demonstrated the ability to visit every home unseen in one night, and no one has successfully been able to recreate the naughty or nice list. Even though it may be possible after the fact to determine whether someone was naughty or nice on the list (based on the gift received), by then the information is obsolete as Santa has already begun working on the list for the next year. Even though, presumably, Santa has an army of elves which may have access to the list and may know Santa’s secret methods, those “employees” must be under pretty strict orders not to divulge it, because not even a leak has occurred. Santa is likely constantly monitoring any potential dissemination of his secrets as he “sees you when you are sleeping and knows when you are awake.”

With all that in mind, Santa likely could have trade secret protection, and could sue for unauthorized use of them. At the very least, I image that such an infringer would permanently end up on the naughty list.

Having an experienced legal team is the best way to protect your trade secrets. If you need help understanding trade secrets and want to inquire about protecting your company, contact Goosmann Law Firm today!