As the pace of innovation accelerates, trade secrets have become more important as ways to give companies a critical edge in the market place. There are many preconceptions about trade secrets – what they are and the best way to protect them. We at TAL Global have been involved in many cases of actual or suspected theft of business secrets. This paper provides an overview of some of the best practices and issues associated with trade secrets.
What is a Trade Secret?
Trade secrets must have economic value, be unknown to others and protected by the owner. Contrary to popular opinion trade secrets do not have to be the latest in technology, and can be stored anywhere from a smart phone to a human brain.
When it comes to business secrets, an ounce of prevention is worth more than a pound of cure; it can be worth literally millions in saved attorney’s fees. Organizations can help insure that they do not run afoul of the trade secrets of others by using these best practice tips:
1. Policy & Practices
Have a clear policy in place that identifies what the firm considers a business secret. Define them in terms of categories rather than specific items. Remember that the legal department is part of Executive Management and must be involved in policy creation and enforcement.
2. Restrict Access
Protect the secrets by limiting those who have access. Employ the ‘need to know’ principle used by the military. Only those people who need to know the secret to do their job should have access to it.
3. Single Responsible Person
Organizations should have a single, knowledgeable person managing company secrets and their access. He or she should also have the authority to restrict, monitor and audit access.
Employees should be properly trained to recognize company secrets, protecting them and reporting suspected improper disclosures. Cross department training is a must so that all departments, especially marketing/sales and engineering agree on what are trade secrets to prevent accidental disclosure.
5. Personnel Actions
On-boarded new employees and outgoing employees need to affirm or reaffirm their obligations to safeguard trade secrets. In the case of on-boarding, care must be taken to avoid the “inevitable disclosure” doctrine wherein new employees come to the firm with their former employer’s secrets. Assigning them in areas distinct from their work at the former employer is a good start.
Organizations should adopt a holistic approach to protecting their secrets:
1. Technical Measures
Organizations should adopt Data Loss Prevention (DLP) and other technical safeguards to prevent the exfiltration of trade secrets.
2. Labeling and Marking
Trade secrets should be clearly labeled to put people on notice as to identify trade secrets.
Organizations should regularly audit access and use of trade secrets to determine if there are any anomalies.
When all else fails, the last resort getting in touch with a suitable law firm such as Sidley Austin or others and undertaking legal action. The elements needed for a successful case for misappropriation of trade secrets are:
- Proof of the existence of the trade secret.
- Misuse of that secret by another.
- Economic damages resulting from the misuse.
Effective security of trade secrets requires a continuous cycle of Prevention, Protection and perhaps even Prosecution. TAL Global has considerable experience in assessing trade secret vulnerability, misappropriation investigation and litigation support. We are glad to answer any questions you might have.
COL (R) Lawrence D. Dietz, Esq.
TAL Global Corporation
General Counsel and Managing Director, Information Security
Colonel (R) Lawrence D. Dietz is a nationally recognized expert in the areas of cyber security, cyber warfare, information security and intellectual property. Mr. Dietz is a licensed attorney and also provides litigation and legal support to our clients in these matters.
As a retired Army Reserve Colonel specializing in intelligence and PSYOPS, Mr. Dietz has over 30 years of diversified military and commercial information and cyber security experience. This unique knowledge combined with the thought leadership of academia enables Mr. Dietz to bring varied approaches and solutions to clients’ challenges.
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