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A Better Partnership

Publications

May 2007
16
May 16, 2007

Are You Protecting Your Trade Secrets?

Most companies have confidential trade secrets that are essential to their continued success. Not all companies, however, take the necessary steps to ensure that these trade secrets remain secret even after employees who had access to the secrets have left the company.

Trade secrets are not protected by the mere fact that they exist. The law imposes a duty on the employer to use efforts that are "reasonable under the circumstances" to maintain the privacy of the information. State-of-the-art safes and armed guards are not required, but employers must limit access to the information to the extent possible and provide notice to employees of the information's confidential nature. To that end, employers should take the following steps to ensure that their trade secrets remain secret and protectable under the law:

  • Require employees who deal with confidential information to sign confidentiality agreements.

     
  • Advise employees of the confidential nature of the information or project they are working on.

     
  • Place confidential and proprietary notices on important documents.

     
  • Restrict dissemination of confidential material to those who need access to it.

     
  • Physically secure the premises and equipment so that outsiders do not have access to confidential information.

     
  • Establish a procedure for document protection, retention and destruction.

     
  • Assign specific employees or groups of employees to have custodial responsibility for confidential information.

     
  • Establish a procedure to recover confidential documents that have been supplied to outsiders.

     
  • Restrict the exchange of confidential information via email and implement password protection of documents contained in electronic format.

     
  • Keep physical copies of the confidential information in locked file cabinets.

In addition, when employees leave your employment, you need to take steps to ensure that the confidential information they had access to remains confidential. First, you should immediately restrict employees' access to confidential information (both physical and electronic). Second, you should recover all company property within employees' possession and have employees acknowledge in writing that all property has or will be returned. Third, you should search employees' computers to ensure that no confidential information has been transferred, printed or downloaded. Finally, you should send a written notice to employees reminding them of the confidential information they had access to, their obligations under their confidentiality agreement (attaching a copy), and the general protection for trade secrets under the law. You should also consider sending notice to employees' subsequent employers to put them on notice of the employees' obligations and the potential for misappropriation of confidential information.

Taking these precautions will help ensure that your company's trade secrets remain secret. If you have any questions or need assistance in taking the necessary steps to protect your trade secrets, please contact your WN&J labor contact, or any member of the WN&J Labor and Employment Group.
 

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