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They are trade secrets only if you treat them as such

A federal judge in the Northern District of Illinois recently taught a painful lesson to a business owner. The plaintiff alleged that an employee had taken information that was important and sensitive enough to the company that it qualified as a trade secret.

The judge saw it differently, explaining that there are two reasons why the sensitive information did not qualify as a trade secret:

  1. The information must be secret enough that the info has value
  2. The business owner must take steps to maintain the secrecy of the information

In this case, the former longtime president of the company left and started a competing company. When he left, he took a flash drive with the old company’s suppliers, customers and pricing. He also hired an employee from the old company, who allegedly also brought sensitive information. The new company used that information to target customers and suppliers and to provide a general reference for determining the new company’s initial needs.

Based on the actions of the new company, the old company thought it had a pretty strong case. Nonetheless, the judge said that the company’s data security “was so lacking that it is difficult to identify the most significant shortcoming.”

According to the judge, the company failed to:

  • Enter into non-disclosure and/or confidentiality agreement with employees
  • Train employees about keeping business information confidential
  • Asking departing employees if they have any confidential information, and request that they return it or delete it
  • Restricting employees’ access to important information
  • Labeling documents as confidential or proprietary

Protecting a companys assets

A knowledgeable intellectual property attorney can be invaluable in helping companies shore up leaks of information that would be useful to competitors. They do this by drafting protocols and contracts to address the list above as well as other issues unique to the business.

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