Does Your 2014 "To Do" List Include Updating Your Company's Trade Secret Protections?

03 January 2014 Labor & Employment Law Perspectives Blog

As you consider the tasks you did not quite finish in 2013 and look ahead to 2014, we recommend including on your to-do list a review of your company’s practices and procedures for protecting its valuable, proprietary information. Chances are that your company engaged in significant efforts in the past year to enhance its competitive edge and improve its market position. Even if those efforts did not include developing a cutting edge product or a secret flavor for holiday fruitcake, they may still be protectable as trade secrets. However, one of the key drivers to determine whether proprietary information is protectable as a trade secret does not depend on what the proprietary information actually is. Instead, it depends upon whether your company has engaged in reasonable efforts to maintain the secrecy of that proprietary information. As you set priorities for 2014, evaluating your company’s efforts in that regard should be high on your list.

Many types of employer information, processes, business methods and techniques can benefit from trade secret protection. For example, if your company has invested in innovation, process improvement or sustainability, created efficiencies in supply chain management or developed technology to evaluate “big data” to help refine your company’s focus on product and market development, you should be protecting all of this innovation because it comprises the “secret sauce” that helps your company compete and succeed. Certain criminal statutes may also provide protection; however, those too will provide greater protection to companies who protect themselves.

While not an exhaustive list, here are several key questions to assist in identifying additional protections for your company’s valuable proprietary information.

  • Are employees, vendors and business partners who have access to proprietary information required to enter into non-disclosure agreements?
  • Are your key employees subject to enforceable, updated non-compete agreements?
  • How is access to physical files and documents containing proprietary information controlled and maintained?
  • Are critical documents marked “Confidential”?
  • How is electronic access to proprietary information controlled, such as by password protection or encryption?
  • Are employees permitted to work on and to transmit documents containing proprietary information from personal mobile devices?
  • Does the company examine the hard drives and recent email activity of departing employees to look for communications with competitors or the transmission of company files to a personal email account?
  • Does the company take action to enforce its non-disclosure and non-compete agreements when it learns of possible violations, no matter how minor?

Additional inquiries will depend upon the specifics applicable to your company, such as who has access to proprietary information and how confidentiality is maintained. Undoubtedly, your company has made and will continue making a very sizable investment of time and money to innovate and improve. Preserving and protecting that investment should be a top priority in 2014.

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