Don’t Let Your Trade Secret Horse Out of the Barn …

Kegler Brown Labor + Employee Relations Newsletter

In today's business environment, employees frequently leave and go to work for competitors. When that happens, employers worry that their confidential information and trade secrets may become compromised or, even worse, used by their competitors. Legal protection for confidential information is available, but only if the company can prove that it has taken reasonable steps to maintain the confidentiality of the information. Unless the information has been protected and actively treated as confidential, legal protection may very well be lost. Don't wait until it's too late to take steps to protect your confidential and trade secret information.

Some of the precautions you might want to consider to protect valued information include the following:

  • Culture – You should cultivate an environment where it is continuously stressed, and reinforced, that maintaining the confidentiality of important, proprietary information is critical to the success of the business. This message should be spelled out in Employee Handbooks and underscored in employee orientation and training.
  • Policies Directed Toward Confidentiality – Your Employee Handbook should have a specific provision that outlines confidentiality expectations. In addition to the confidentiality statements in your Handbooks, other policies should complement the confidentiality objective. For example, policies that employees should not reveal their computer passwords to others should be stressed.
  • Identification – Documents and records that are confidential should routinely and uniformly be stamped with a conspicuous legend that reads "CONFIDENTIAL." All such documents should be physically maintained in separate files, with restricted access. Computer-generated documents should carry the same legend, and should be protected from general access, perhaps by the requirement for a second-level, restricted password. Prohibitions on e-mailing or downloading internal records should be articulated.
  • Confidentiality Agreements – Every employee who has access to confidential information should be required to sign a separate agreement that prohibits the use or disclosure of the information, during or after employment. By the same token, visitors, potential buyers, consultants and any other person outside the Company who will gain access to confidential information should be required to sign a similar agreement.
  • Restrict Access – Critical to the protection of confidential information is a working policy that restricts access to those on a "need to know" basis. This restriction should apply both to records and physical access to sensitive working areas of the Company. Some companies implement tracking systems that catalog access to records, as well as retrieval, storage and destruction.
  • Reminders – Whenever an employee who has had access to confidential information leaves the Company, they should be formally reminded of their legal obligation not to use or disclose the information, as well as the Company's firm resolve to protect its legal rights.

Measures such as these not only protect your confidential information from disclosure, but they may be absolutely critically if you find the need to ask a court to enjoin and protect your confidential information from unfair use.