Trade Secrets: Are You Covering Your Ass(ets)?

“Customer lists, manufacturing and marketing plans, financial information, manufacturing techniques and product designs, can all be protectable… These are examples of typical business information that may give a business an advantage over competitors who do not have the information. General knowledge and skill of a worker can be transportable to a new job.” (From A Multidisciplinary Approach To Trade Secret Protection in the Digital Age by Ladas & Parry LLP)

Failure to protect your company’s confidential information can have a direct impact on your profits, your brand, and your ability to compete. For your reference, a broad look at protecting trade secrets, from lawyers and law firms on JD Supra:

– Hoping for the best is not a viable strategy:

“It is not enough in a post-WikiLeaks world to hope that an admonition not to disclose sensitive company information in a social media policy will be enough. If company trade secrets are posted on the Internet they cannot be taken back, and if newsworthy, they will go viral.” (From Protecting Trade Secrets In A Post-WikiLeaks World by Sheppard Mullin Richter & Hampton LLP)

– Robust computer usage policies set important boundaries:

“An employer’s computer usage policy must place clear and conspicuous restrictions on its employees’ access to the computer system and any database that contains trade secret, confidential and/or proprietary information. If employees are not subject to a strict policy, it may be difficult for an employer to bring a civil action for theft of its information unless that information has independent trade secret protection.” (From The Computer Fraud And Abuse Act Isn’t Just For Computer Hackers Anymore; The Ninth Circuit Extends Its Protection To Employee Data Theft by Ford & Harrison LLP)

“The Ninth Circuit’s decision [in Nosal] confirms the importance of clear employee policies that specify what access to the company’s computers and computer networks is authorized, and what is not authorized, as well as the importance of routine reminders so that employees are aware of these policies.” (From United States v. Nosal: Ninth Circuit Decision Increases Protection Against Employee Computer Data Theft by Morgan Lewis)

– But sometimes policies are not enough:

“… employers have substantial means at their disposal to monitor their employees’ conduct and communications. Available options range from reviewing employees’ email communications and computer usage to monitoring telephone discussions. In general, these tactics are lawful unless specifically prohibited by statute or the employee has a reasonable expectation of privacy under the circumstances.” (From Protecting Trade Secrets Through Employee Surveillance: Risky Business by Fisher & Phillips LLP)

– There’s no such thing as “too specific” in employee contracts:

“In the recent Mattel, Inc. v. MGA Entertainment, Inc. decision, for example, an employer’s failure to define the term ‘inventions’ as including ideas resulted in uncertainty over whether a contract gave Mattel ownership of a lucrative idea generated by the employee during his employment. Had Mattel’s contract included the term, it may have been able to avoid lengthy, expensive and damaging litigation.” (From As Economy Evolves, Importance of Protecting Trade Secrets Grows by Hopkins & Carley)

– Litigation can expose the very secrets you’re trying to protect: 

“Non-compete and trade secret litigation inherently involves disclosure of confidential information. Plaintiffs argue that defendants took or used the plaintiff’s confidential information, and they often want the defendants to turn over their files for review. Defendants often complain that the plaintiffs are engaged in a fishing expedition or that they are entitled to review the plaintiff’s files in order to pressure test the trade secret claims.” (From Want to Litigate in Private? Opt for Arbitration by Fisher & Phillips LLP)

“While courts will make exceptions to keep trade secrets private, a ‘strong presumption in favor of access’ is the starting point. A party seeking to seal a judicial record bears the burden of overcoming this strong presumption by showing ‘compelling reasons’ to deviate.” (From Sealing Judicial Records in Trade Secret Litigation by Fisher & Phillips LLP)
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