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Checklist for Safeguarding Your Trade Secrets


Here at MKT Law, we’ve been handling a number of trade secret cases lately where a former employee, or soon-to-be former employee, has taken trade secrets from our clients’ businesses for their own personal gain. There is no way to protect your intellectual property completely – there’s nothing in this world you can 100% safeguard from others – and make it so no one can ever take it from you and give it to a competitor, use it themselves, or even try to hold it hostage for a ransom. But that doesn’t mean all your ideas, plans, technologies, developments, business intelligence and the security for your future as an ongoing concern are out there unprotected, but your trade secrets are always vulnerable and need concrete actions to keep them safe. There are a few common sense things you can do to increase the odds of your trade secrets not falling prey to unauthorized disclosure, theft or misappropriation.

Here’s 5 things you can do to protect your valuable intellectual property, business’ confidential information and trade secrets:

  1. Non-disclosure agreements: Whenever you hire someone you must put it in writing and enforce your rights to maintain business secrets and confidentiality. It should be right there in the initial contracts for employees, subcontractors, strategic partners or anyone else who may become privy to protectable information. Using confidentiality and nondisclosure agreements (with proprietary rights reservations) and non-solicitation and non-compete agreements are essential for top-tier employees. But you should have your sales reps, techs, office managers, and all others with access to company trade secrets sign these types of agreement before they are hired and as a condition of their employment with you. If they didn’t at the start of their employment, contact MKT Law before asking any current employees to sign one now so we can help you make sure the agreements are valid and sufficiently protect you..
  2. Training and documentation: Your company must train employees on trade secret issues, too, so they understand the importance of confidentiality because the law looks to the things you did to protect your trade secrets yourself before the Court will protect them, too. You also can’t be hesitant to strictly enforce any breaches of confidentiality/trade secret protocol, and be thorough with how you keep relevant documentation filed away, including completed training records, acknowledgement sheets in every employees’ personnel file and records of actions taken when your protocols were not followed.
  3. Loose lips really do sink ships: They are only secrets if you keep them secret. The law requires you to make reasonable and ample efforts to keep your trade secrets out of the common knowledge. If you go around telling people about them, or make them easily available, you will not be protected by the law or in court. Restrict access to key information, use secured access areas (electronic and physical) with sign in/out logs, require that passwords be secure, complex, and changed frequently, and mark confidential information as CONFIDENTIAL. Don’t stop there, though. Make every effort to protect your prized possessions. You can use video monitoring cameras in key areas of your office, encrypt electronic data, establish sufficient backup protections, create on- and offsite copies of critical documents, and set rules for offsite computer use and data access by employees. Any visitors to your office or workplace should be checked in/out, sign an acknowledgement form that says they are obligated to keep any information they may see confidential, always designate an employee to accompany them while visiting onsite, and enforce restrictions on offsite data and file usage.
  4. When protections fail: Have a Trade Secret Emergency Response Plan (TSERP, if you like acronyms) ready in case an inadvertent disclosure is ever made. You should have form emails and phone scripts at the ready for a quick response and for contacting anyone who was privy to the inadvertent disclosure. Be ready with forms for the person or people to sign that obtained the information due to the inadvertent disclosure that acknowledges the return of the data or its destruction (whichever is appropriate), emphasizing its secrecy and the accidental nature of the disclosure, and requests to keep it secret and not disclose it further. You may have to show a court later on what you did to maintain secrecy and protection of your intellectual property despite the inadvertent disclosure in order for it to remain protected as a trade secret under the law.
  5. On the way out: Create strict guidelines and rules for employees that quit or are terminated now before the next person leaves your business or company. Exit interviews are a great way to reaffirm that they understand the nondisclosure and non-compete agreements you had them sign before their employment began. You may want to try to learn where the employee is going to be working next, have them sign-off on another declaration of confidentiality, swear to honor it, and not take any info or data with them. As soon as it is reasonable, terminate entirely the employee’s access to physically and electronically accessible data that is sensitive, change all accessible/known passwords immediately, and, in particular, secure and inventory all paper files and electronic data the employee had accessed or could access; don’t forget to check log files and copy card usage, voice mails and email accounts, If they had a company cellphone, go over the records that may show that there has been information leaked or evidence that the employee may have been transferring confidential company data offsite in the last few months before their departure. When it comes time for them to leave and “never return”, make sure the employee leaves the building with an escort and none of your data.

Even with the best laid plans and preparations, someone can pull the wool over your eyes and take some of your intellectual property without warning. Don’t get frustrated if this happens. As previously mentioned, it can happen to anyone. Instead, contact MKT Law for help. With foresight and planning, you can increase the protection of your company’s trade secrets (and value) and be more likely that a court will do the same if you fall victim to misappropriation of one of you business’ most valuable assets. Call 612.260.5109 today for more information.

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