Wirtz Law Blog

Business law attorneys are frequently dealing with accidentally or intentionally disclosed confidential, proprietary and trade secret information to someone outside the business. Employees often inadvertently disclose proprietary information as they market their expertise and background. This often creates an undue risk to companies’ proprietary information and trade secrets. According to one survey of US companies by Proofpoint Inc., “nearly 1 in 5 outgoing emails (18.9%) contains content that poses a legal, financial or regulatory risk.” More than 25% of the US Companies surveyed reported that “their business was impacted by the exposure of sensitive or embarrassing information in the last 12 months.” There are precautions you can take to protect your valuable trade secrets.

Legal Protections

• Require all employees and independent contractors to sign an agreement not to disclose proprietary or trade secret information.
• Develop and implement a company policy for monitoring outgoing emails.
• Develop and implement a company policy notifying all employees that they do not have an expectation of privacy in their emails or computer actions.
• Review marketing materials and technical manuals for accidental disclosures.
• Include non-disclosure agreements in all contracts with vendors or other business relationships.
• Notify all employees at least annually and at their exit interviews that their duty to maintain the company’s trade secrets and proprietary information extends beyond their employment period.

Procedural Protections

• Maintain all proprietary information and trade secrets on a password protected network.
• Require any employee or independent contractor entitled to access proprietary information or trade secrets to login each time they need access.
• Ensure that each company computer does not immediately send emails from the outbox upon clicking send. This allows retrieval by sender.
• Prohibit recording devices, such as cameras, cell phones, and thumb drives, in high security areas such as manufacturing or research.
• Restrict (encrypt) documents with proprietary information or trade secrets from digitally leaving the company by email.
• Most importantly, look for signs that an employee is getting ready to compete against your business. Preventing misappropriation of your proprietary information and trade secrets is better than recovering from the wake of the damages. Often an employee will quit without warning or will provide a pretextual reason for leaving such as “I’m taking some personal time off.” If you have reasonable concerns about an employee, secure the employee’s computer for a computer expert to analyze. Every access to the computer can change or even eliminate a trail of evidence, so avoid investigating the computer by yourself.

It’s never too late to update your trade secret security. As Ben Franklin said, “an ounce of prevention is worth a pound of cure.”

Thank you for your interest in this article. You should not rely upon it as legal advice. The information contained herein does not create an attorney-client relationship. This article is intended for entertainment and general information purposes only. Laws vary state. Anyone seeking legal advice for a specific situation should consult a qualified lawyer or similar qualified professional in the appropriate state.