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Protecting Your Trade Secrets

Updated: Sep 20, 2023

folder with a red stamp that says "top secret"

Every company has information that is important to its business. This information could be financial in nature or perhaps substantive company records. No matter what the content of the information, it is likely a company wouldn’t want a competitor to obtain or use this information for its own benefit. Therefore, it goes without saying protecting company confidential information is crucial to the success of the business in the marketplace.

The law defines a trade secret as information that must confer a competitive economic advantage when kept secret and be protected by its owner through reasonable measures to preserve its secrecy. Examples of trade secret items are: formulas, drawings, patterns, compilations of information, including customer lists, programs, devices, methods, techniques, or processes. Information readily available by independent discovery cannot be considered a trade secret.

There are various measures that can be implemented to reduce the possibility of trade secrets being disclosed to outsiders. The most obvious includes requiring that your employees sign confidentiality, non-disclosure, and non-compete agreements at the outset of their employment with your company. This immediately sets the tone for the degree of confidentiality you expect from your employees. However, these agreements may be difficult to enforce if the operations of your company do not reflect your intentions to keep certain information confidential as a trade secret. Measures you may want to consider implementing are:

  • Always identify for your employees the type of information that is protected as a trade secret.

  • Mark the confidential documents clearly as “CONFIDENTIAL” or “TRADE SECRET”.

  • Include information in your employee handbook on the trade secret protection policy and clearly state that unauthorized disclosure of trade secret information is grounds for discipline, including termination

  • Restrict physical access to trade secret information. Advise employees as well as clients to keep confidential information in a safe place with safekeeping measures such as locks.

  • Control access to trade secret data in computers with passwords and encryption.

  • Disposal protocol such as document shredding.

  • Limit access to confidential information.

  • Review all documents leaving your company for trade secret exposure.

  • Exit interviews should be prompt and include a reminder of confidentiality and non-compete agreements. You should also obtain new employer information if available.

Departing employees should be reminded of the company’s trade secret policy, confidentiality clauses in employment agreements in the exit interview, post-separation correspondence, etc. It can be difficult to prove that the information disclosed could actually be considered trade secret information. Therefore, the more precautions that are in place, the less chance there is of an unauthorized disclosure and furthermore, the less chance that an unauthorized disclosure could be defended in a lawsuit.

Your business is one of your most valuable assets. It’s important to you and your family. Having a plan to protect your trade secrets is a great way to ensure its value. The experienced business attorneys at Fiffik Law Group can prepare a business plan and help protect the hard work you’ve put in for your small business and family. Contact us today for a free consult.


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