Are You Leaving Some Of Your Most Important Assets Unprotected?–Trade Secrets

Contributed by Kristin A. Biedinger

Trade secrets can be some of the most valuable assets a company has and it is important put procedures in place to safeguard this information. The Uniform Trade Secrets Act, adhered to by a majority of states, defines trade secrets as information that derives independent business value from the fact that the information is not generally known and is subject to reasonable efforts to maintain its secrecy.

Implementing a company-wide protection strategy may seem overwhelming, especially to small companies.  But, there are five easy ways to protect trade secrets that can be used by any company.

1.  Document Intellectual Property  Your company should routinely review and document its intellectual property assets.  It is nearly impossible to protect trade secrets if they have not been properly identified.  Intellectual Property Disclosure Forms provide an easy way to document you company’s trade secrets and should include information like:

  • Who developed the trade secret
  • When it was developed
  • A description of the trade secret.

This documentation should be periodically audited and updated to reflect the trade secret’ status.

2.  Marking  Confidential information should be clearly marked as such.  Saying that something is “confidential and proprietary” or “confidential” should be used.  This provides notice to any employee working with the information that it is a trade secret and should be kept confidential.  However,  only information that is truly confidential should be marked; a trade secret protection plan that includes blanket marking of all documents as “confidential” is not a true protection plan and can be found unenforceable.

3.  Use Non-Disclosure Agreements (NDAs) Trade secrets are valuable because they are not generally known and the company has made reasonable efforts to maintain their secrecy.  Sharing trade secret information should be carefully analyzed.  If there is a compelling business reason to share trade secret information with a third party, Non Disclosure Agreements  (NDA) should be used in advance of sharing the information so the person with whom it is shared, has agreed that they have a duty of confidentiality, maintaining its secrecy.

It is important to note that a well-drafted NDA should be limited in scope and duration.  It is important to periodically audit any NDAs a company has with a third party.  You should confirm that the NDA is remains accurate and complete.  You should also docket the expiration date of the agreement so, if you want to extend it you will be able to provide an amended NDA timely. Since most NDAs impose a period of confidentiality of only three to five years, it is important to change the language in the NDA so it specifies the period of confidentiality for trade secrets to be for the life of the trade secret.

Many company’s use NDAs that require any confidential information be marked as such.  If your company is disclosing confidential information under an NDA with a marking requirement, it is essential that these requirements are followed.  If the marking requirements are not followed, the transfer of otherwise confidential information may not be protected by the NDA and can result in the loss of trade secret status.

4. Monitor and control access to information In addition to documenting trade secrets, companies should also document and monitor which employees have access to this trade secret information and where the information is stored.  For example, electronic files containing trade secret information should be saved on a secure network and only those employees who have a need to know the information should be granted access.

If employees travel for business purposes, they should be provided with “clean” lap tops that do not have any trade secret or other confidential information saved on them.  This prevents the inadvertent disclosure of trade secret information should an employee’s computer be lost or stolen.

5.  Educate your employees  The most effective way to protect your trade secrets is to periodically educate employees about the importance of the secrets and the steps everyone should take to protect them.  Employees should also understand the necessity of using NDAs and to be able to identify when one is necessary.  Employees should also know who in the company they should contact if they have any questions regarding trade secrets, or if they suspect trade secret information is being disclosed outside of the company.

If your company has questions regarding trade secrets or you would like more information on how to implement a trade secret protection strategy, please contact Kristin Biedinger at (412) 594-3916 or kbiedinger@tuckerlaw.com.