Identifying trade secrets does not mean figuring out how to barter better

August 27th, 2018 by Emma Schuering and Eric Packel at Polsinelli


This blog was written by Emma Schuering and Eric Packel at Polsinelli. Polsinelli authors hrsimple resources in Missouri, Kansas and Illinois. You can find the original blog post and their labor and employment blog Polsinelli at Work (which is excellent) on their website.

 

Identifying trade secrets: The first step to protecting employers' competitive advantage

Emma Schuering and Eric Packel

Employers should be able to definitively identify their “trade secrets” and non-public information.  Indeed, employers may miss out on opportunities for relief from misappropriation of their trade secrets by former employees and competitors if they do not take time to specifically identify and understand their trade secrets.  Before an employer can effectively protect against the theft, disclosure, and misuse of its trade secrets, it must first clearly understand what is—and what is not—a trade secret.  Once the trade secrets are identified, employers should take careful steps to protect trade secrets and confidential information from competitors, as well as departing employees. 

What are trade secrets?

To begin, anything that gives an employer a competitive advantage may be a trade secret.  Trade secrets are a subset of an employer’s confidential information, and can include information about customers or clients, business methods, pricing data, machinery, marketing strategies, techniques, formulas, processes, or virtually anything else that is secret, unique,  and valuable to the employer.  Considered this way, every employer inevitably has some potential trade secrets. 

Another way to recognize possible trade secrets is by evaluating who has access to the information.  For example, if the information is subject to measures to maintain its secrecy, such as limited physical or electronic access, it may be a trade secret.  Alternatively, if the employer uses contracts with its employees and business partners to protect the confidentiality and limit the disclosure of the information, said information may very well be a trade secret, too. 

What qualifies as a trade secret?

To qualify as a trade secret, the information must generally 1) be subject to measures to maintain its secrecy and 2) derive independent value from being secret.  If the trade secret is not sufficiently protected or becomes public -- even inadvertently -- it could lose its status as a trade secret, decreasing its worth to the employer.  But an employer cannot realistically be expected to adequately protect its trade secrets if it does not first know what it must protect.  That is why it is so important for employers to regularly audit their trade secrets and update their protective measures, as needed. 

Employer takeaways

Departing employees with access to trade secrets pose a significant threat to an employer’s trade secret security, thus necessitating a consistently-enforced protocol to off-board those employees and ensure compliance with any continuing post-employment obligations owed to the employer.  However, upon discovering that a departed employee may be misappropriating trade secrets, courts expect swift action from the employer to protect its assets—including, early, specific identification of exactly what the employer considers as its stolen trade secrets. 

With proper planning, including routine auditing of its trade secrets and protective measures, an employer can position itself for greater success if it chooses to pursue relief for the theft in court.  Employers with questions regarding trade secret identification or protection should consult with competent counsel.





Can't find what you're looking for?

Sign up for free to gain access to our complete HR Library


Free Webinar
Handling Real World Problems

September 19th, 2019 at 12:00pm CDT

SHRM & HRCI certified

Related posts

Thanks-giving isn't just about turkeys - include the good employees too

This blog was written by Bobbi Britton Tucker at Cozen O'Connor, which authors our Minnesota Human Resources Manual, New York Human Resources Manual, and Pennsylvania Human Resources Manual. You can find the original post and their HR Headaches blog (good stuff) on their website.   The Impo...

Cursing, surfing, weapons, gadgets – illegal, inappropriate or OK?

It happens in almost every workplace almost every day: somebody swears or is on an iffy website or is carrying a knife (or worse) or is using their own (not secure) phone or computer to send off a quick business email or text. So what is illegal, what is inappropriate and what is just not that...

Costumes, booze and the Great Pumpkin – beware the office Halloween party

This blog was written by Adam Gutmann at Cozen O'Connor, which authors our Minnesota Human Resources Manual, New York Human Resources Manual, and Pennsylvania Human Resources Manual. You can find the original post and their HR Headaches blog (good stuff) on their website. Halloween in the Work...

TN – A drug-free workplace program is good

Tennessee Department of Labor Revises Drug-Free Workplace Program Requirements William S. Rutchow Twenty years ago, the Tennessee Department of Labor (TNDOL) adopted regulations implementing the Tennessee Drug-Free Workplace Act and establishing the Tennessee Drug-Free Workplace Program. Th...

The #1 office perk is . . . ?

Natural light Natty Light Spam Lite Lite-Brite Blinded by the Light Any answer except #1, Natural light, may not be correct. Have a good Friday.

List 10 Up: Top tips for starting a workplace incident interview

PODCAST Workplace investigations can either stall out without any clear answer, or instead succeed and lead to a conclusion, depending on the effectiveness of the interviews. However, many people conducting interviews skip simple steps at the very outset that maximize their effectiveness.  ...

Is that red light flashing?

This blog was written by Zoe Argento and Julia Arnold at Littler Mendelson, which authors our Model Policies and Forms for Maine Employers. You can find the original post and their Insight News & Analysis (which is excellent) on their website.   Hit the Pause Button: The Implications of...

Round up stew: sick leave, harassment, non-compete, etc.

This blog was written by Shennan Harris at Squire Patton Boggs. Shennan is a co-author of our Wages and Hours – An Employer's Guide. You can find the original blog post and their Employment Law Worldview on their website.   State Law Round-Up: New Sick Leave, Sexual Harassment Laws and Othe...

Milk Stork delivers for working mom's and their baby

If you are in the practice of sending employees on overnight business trips AND you employ new mothers AND you believe in treating your employees right we’ve got just the bird for you.  Milk Stork is the first breast milk shipping company to support nursing mothers who are on the road and need...