Protecting Trade Secrets Requires Close Scrutiny and Oversight of Company’s Employment Counsel

The juncture of IP protection policies and employment law must been foreseen, planned for and dealt with, especially when dealing with trade secrets. 

Trade secrets require policies and practices that work together to keep them secret, or they will not qualify. These policies and practices create disputes over confidential and proprietary info, business and technical. Who owns it?  Who has a right to use it?  Who needs to use it?  How can the secrets be safeguarded?

An interview recently produced on Legal Talk Network gives a fairly thorough outline of what valuation analysts should look for in litmus testing a company's trade secrets validity. Contracts (confidentiality, nondisclosure, restricted covenant, etc.) are appropriate tools. Policies and practices must be consistent with best practices and the law, and the law varies by jurisdiction. How current are the agreements? What satisfies the requirements for “adequate consideration” in the jurisdictions covered? For example, "At Will" employment, by itself, may suffice for adequate consideration, depending, again, on the jurisdiction.

The most common mistake is “not having a well-thought out legal and business strategy.” But firms make other critical mistakes in the process. They tend to overreach; “not everything is protectable in every jurisdiction.” For example, it is a mistake to tie up rank and file employees. How much damage can the receptionist do to the company? Overreaching dilutes effectiveness.

Key to your due diligence: Of course, the biggest mistake occurs when secret information is never treated confidentially.  Companies protecting trade secrets need thorough training, and effective, well-communicated policies and practices. Who needs to know? Who knows passwords? How often are passwords changed? What is the document retention policy?  Is there an established, consistent shredding policy? Is data encrypted. Importantly, did corporate employment law counsel review the trade secrets protection policies and practices of the company?