Protecting Trade Secrets From Employee Misappropriation

Description

As layoffs soar, many employees, hoping to avert job loss, are pursuing employment with company competitors. Losing an employee to a competitor can create serious legal risks for companies, most significantly the risk that workers will take business trade secrets to their new employer.

Because the loss of trade secrets to a competitor can doom a business, it is critical that companies clearly define what constitutes a trade secret and take appropriate steps to safeguard the confidential information from misappropriation by departing employees.

Clear written policies, consistent employment practices and noncompete agreements, where allowed, are key to protecting confidential business information and avoiding lawsuits.

Listen as our panel of employment law attorneys explains how companies can protect trade secrets from employee misappropriation and offers best practices for dealing with a departing employee suspected of stealing confidential business information.

Outline

1. What constitutes a “trade secret”—codes and recent case law
   1. Is the information extensively known outside the company?
   2. How many employees of the company know the information?
   3. What measures has the company taken to safeguard the information?
   4. How valuable is the information to the company and its competitors?
   5. What resources did the company expend in developing the information?
   6. How easily could the information be acquired or duplicated by others?
2. How can employers protect themselves from employee misappropriation?
   1. Develop written policies regarding the confidentiality of trade secrets
   2. Use non-compete and confidentiality agreements where permitted
   3. Clearly define company trade secrets
   4. Keep accurate and current records of trade secrets
   5. Limit access to proprietary information to “need to know” employees
   6. Use passwords for electronic information and locks for physical information
   7. Key indicators that an employee may be secretly planning to depart
3. Best practices for dealing with a departing employee to avoid trade secret misappropriation
   1. Request that employees return all company-issued documents at termination
   2. Use exit interviews to remind employees of trade secret policies
   3. Terminate all electronic or other access to facilities and computer
   4. Do not immediately reassign electronic equipment to new employees
   5. Save employee’s hard drive or folders and email box
4. Trade secret litigation
   1. Fact gathering after the employee is gone
   2. Cease and desist letters
   3. The race to the courthouse
   4. Potential claims
   5. The inevitable disclosure doctrine

Benefits

The panel will review these and other key questions:

• What factors do the courts consider in determining whether confidential information constitutes a "trade secret?"
• What are the steps for employers to follow to reinforce the confidentiality of company information with employees?
• What are the best methods for employers to prevent former employees from taking advantage of competitive and confidential insider knowledge?
• How should employers deal with departing employees who are suspected of misappropriating trade secrets?

CLE Credit

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