5 Ways to Protect Your Trade Secrets

Earlier this month, game developer Zynga took the offensive in a dispute over the theft of trade secrets when it sued a former employee for walking out the door with proprietary information:

“… Zynga alleges [Alan] Patmore copied over 760 corporate files into his DropBox account (in a folder which he allegedly named ‘Zynga’). The information taken, Zynga claims, included ‘know-how of core game mechanics and monetization techniques.’” (ArsTechnica)

The lawsuit is an unusual tactic, says Jason Stiehl in this LXBN video interview, because it could require the company to make public the very trade secrets it’s trying to protect:

How can employers protect trade secrets before employees jump ship? Here are five ways:

1. Develop policies and procedures for protecting sensitive information:

“… in Omega Optical, Inc. v. Chroma Technology Corporation, the Vermont Supreme Court held that Omega’s technology for manufacturing microscope filters could be a trade secret, but that Omega had no internal policies or procedures in place to protect the confidentiality of its technical information.” (Downs Rachlin Martin PLLC)

2. Protect the information as if your company’s future depended on it: 

“[K]eep trade secrets in a ‘locked’ location, if possible. Such ‘locking’ cannot be overdone… [I]n one case, a court held that a former employee had misappropriated trade secret manufacturing and pricing information because the employee had to bypass locked offices, locked file cabinets, and computer passwords in order to obtain the information.” (Brooks Kushman)

3. Execute non-disclosure and other restrictive agreements with all employees:

“[A non-disclosure agreement (NDA)] protects information that is a trade secret – data that has economic value (actual or potential) due to its exclusivity and is something you’re making efforts to keep secret… To ensure the full protection of an NDA, you’ll need to require the employee to sign a confidentiality agreement when they come on board that defines the scope of information your company is trying to protect.” (Ropers, Majeski, Kohn & Bentley)

4. Limit access to “need to know” employees

“Employees should only have access to information on a need-to-know basis, and limitations should be set in geographical, departmental, and/or subject matter terms. Access to information should be expanded only if and when necessary for a business purpose, and appropriate steps should promptly be taken when necessary to revoke an employee’s access to sensitive information.” (White & Case)

5. Consider patent protection for your secrets:

“Some, but not all, of the information protectable by trade secrets may also be protectable by patents. To better understand trade secret law, one might thus consider the quandary of whether to seek patent protection for an invention or maintain it as a trade secret in relation to, among others, the following three factors: (1) whether the invention is likely to be independently developed or reverse-engineered; (2) the lifetime of the invention; and (3) the requirements and costs of maintaining the invention as a trade secret versus seeking patent protection.” (Snell & Wilmer)

The updates:

Find related law news on JD Supra>>