Labor: A litigator’s perspective on trade secret protection programs

How to protect your valuable information against rogue employees

Companies should have a program to deter and limit trade secret misappropriation. Inside and outside counsel should be involved so their client can be in the best position to seek and obtain judicial intervention to stop trade secret misappropriation and use. A litigator’s perspective focuses on proof needed to obtain a temporary restraining order and prevail at trial.

A seeming axiom of trade secret and unfair competition litigation is that the more brazen and dishonest the behavior of the former employee (and perhaps their new employer), the more accommodating a court may be to a company whose proof is less than perfect. By contrast, the thinner a company plaintiff’s proof is, the more a court may accept a former employee’s argument that there is nothing secret, nor valuable in the assets even if their theft can be proven. While no company hopes for employee misconduct, below are key elements of a trade secret protection program that can help win in court.

Next, identify and limit access to each type of trade secret to individuals or work groups who need to know the information to perform their jobs. Then, compartmentalize and limit physical and electronic access to only those who need to know the particular information in a way that will show a court that the company took reasonable efforts under the circumstances to protect its trade secrets. Methods include labeling “trade secrets,” installing layers of computer password-protected access with warning screens, restricting the ability to print or copy files, imaging key employees’ workstations and laptop hard drives routinely, electronically shredding deleted files that contain trade secrets, formatting hard drives before disposing of old computers, adding the ability to remotely wipe out data from company laptops of exiting employees, installing physical barriers such as locks on doors and drawers, requiring identity and access badges and shredding trash. Include lawful monitoring of networks, workstations and laptops to detect, among other things, attempted downloads of trade secrets and to record all usage.

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Contributing Author

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Mark Terman

Mark Terman is partner in the national law firm of Drinker Biddle & Reath, LLP where he handles labor and employment litigation and counseling matters for employers and their management. He is based...

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