[BreachExchange] Simple Steps to Help Keep Your Trade Secrets Safe

[Audrey McNeil]

http://www.natlawreview.com/article/simple-steps-to-help-
keep-your-trade-secrets-safe

As illustrated by the recent lawsuit by America’s Test Kitchen against
celebrity chef Christopher Kimball, companies in a variety of industries
are vulnerable to losing their trade secrets.

Although it is a common misconception that trade secret issues usually
apply to high-tech companies, every type of business has potential trade
secrets. While state laws as to what constitutes a trade secret vary,
confidential information, processes, techniques, methods, programs,
formulas, patterns, and the like — data that gives a company an edge over
its competitors — can potentially constitute a trade secret. In addition to
the protections offered by state laws, the recently passed federal Defend
Trade Secrets Act also provides new mechanisms to protect against trade
secret theft.

To qualify for protection as a trade secret, however, the information at
issue must genuinely be a secret — it cannot be known by the competition
and cannot be publicly known or available. Additionally, a trade secret
must involve a unique process or methodology. Examples of protected
information can range from secret recipes to the way a home goods chain
organizes its wares or the color schemes used in display windows.

Employers seeking to avoid potential loss of trade secrets should bear in
mind the following:

Trade secret information must be treated like the valuable information that
it is. Courts are unlikely to find that a former employee misappropriated
trade secrets, if the company itself did not treat the information as
valuable and confidential.

Steps to protect your business’s valuable information include: (1)
informing employees about the aspects of your business that constitute
trade secrets; (2) implementing the use of confidentiality agreements; (3)
keeping trade secrets under password protection; (4) marking documents that
are or include trade secrets “confidential”; (5) limiting access to trade
secrets to only those who need the information in order to do their jobs;
and (6) implementing policies that make clear that employees have no
expectation of privacy on company devices.

Employers must also be proactive in monitoring departing employees,
including: (1) requesting that the employee turn over all confidential
information in their possession; (2) requiring prompt return of all
company-issued computers, phones, and other devices; and (3) requiring
departing employees sign a “termination certificate” stating under penalty
of perjury that they have not taken any trade secrets. When in doubt over a
departing employee’s actions, consider a forensic analysis of their
company-provided hardware in order to ensure that valuable information has
not been misappropriated. The key is to take prompt reasonable steps to
protect the confidential information.

When it appears that an employee has engaged in trade secret theft, the
employer should take prompt action, including sending a cease-and-desist
order followed by prompt legal action, if necessary. Failure to take action
in one circumstance may undercut future claims against employees who steal
similar trade secrets. In other words, a court may conclude that if the
information at issue is indeed valuable and secret, the company would have
sought to enforce its rights the first time.

Finally, make sure your employee contracts and similar documents outlining
employees’ confidentiality obligations are up to date an enforceable.
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