Your Trade Secrets Are Yours, Keep Them That Way

Failing to implement a few critical practices can spell the difference between preventing a competitor who has hired away your employee from using your confidential information or stopping it cold and recovering your damages and costs. Creating effective policies using non-disclosure agreements, employee onboarding practices, confidentiality agreements and data protection efforts can dramatically improve the odds of a successful recovery of your information and damages for its misappropriation. Once the information is out the door, however, it is too late to protect it if the proper policies and procedures were not already in place.

Adding practices for protecting the confidentiality of your information.

The easiest and least intrusive step a business can take to protect the confidentiality of its information is to create a confidentiality policy for employees. Your employees are the most likely conduit through which confidential information can be lost, so putting employees on notice of the need to protect the information has multiple benefits. First, it actually educates employees and lets those with good intentions know what they can share and what must be protected. Second, employees or former employees with more nefarious intentions will be legally on notice of the nature of your confidential and trade secret information. This is critically important, as laws that protect your right to maintain the confidentiality of that information are premised on the idea that you have taken steps to protect the information and put employees on notice of its confidential nature.

Confidentiality agreements with employees are also critically important. They are best used at the onset of employment. The agreements should provide as much specificity as possible with respect to the nature of the information to be protected and include a provision that entitles the company to recover its attorneys’ fees in the event that it prevails in an action for breach of the confidentiality agreement. If non-competition agreements are being used with employees, they are a logical vehicle for the additional confidentiality protections.

Onboarding practices with employees should include having them execute all necessary agreements prior to the commencement of employment and walking them through an employee handbook that includes, among other things, the company’s policy on handling confidential information. Employees, for example, should be put on notice that company email accounts are not for employees’ private discussions and that the company retains the right to review all communications and materials transmitted or stored on company computers and email accounts at any time. Company practices should also include technical safeguards, password protections, security devices, email disclaimers and labeling printed documents “confidential.” Businesses should also be mindful of trying to transform publicly available information into confidential information. For example, the company that publishes the names of its clients for purposes of marketing cannot later complain that the names of its customers are confidential or trade secrets.


Does all of this really do any good?

These few simple steps can– and usually do – make the difference between a futile fight and the successful recovery of your confidential information, damages and attorneys’ fees. If the steps outlined in this article are not undertaken, however, think hard about taking legal action as your odds of success fall off precipitously.

Chris represents management in both litigation and counseling on employment law matters and other areas of business litigation. His clients range from manufacturing companies to the service industry. He practices in multiple states, has appeared in numerous federal courts and is admitted to the U.S. Supreme Court. He also conducts training for managers and human resources professionals.

Contact Chris at Larkin Hoffman