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Court says act secretive to protect trade secrets

On Behalf of | Oct 20, 2019 | Uncategorized |

A recent court decision was a useful reminder of a less-than-obvious but possibly important reason for your business to take proactive, early and consistent steps to protect your business’s trade secrets.

Obviously, if you don’t lock your secrets up, they’re easier to steal. But the court also found that a business’s “supposedly secret information” wasn’t secret because the business itself didn’t go through the motions to behave as if it was secret. If you don’t protect your secrets, the court signaled, don’t expect a court to do it for you.

Employees walk off with customer list

The federal case in the Northern District of Illinois involved high-ranking employees of Abrasic 90, a distributor of abrasive products. When they left the company to spearhead another company’s entry into the abrasives distribution market, they took files with information on Abrasic 90’s pricing, customers and suppliers. Abrasic 90 claimed the information was its own trade secrets.

Court doesn’t intervene, but give some pointers

The former employees argued, and the court agreed, the company had done “virtually nothing to protect that information to preserve its status as a trade secret” and showed an “almost total failure to adopt even fundamental and routine safeguards for the information.” Getting the help of an attorney experienced in trade secrecy laws and policies might have saved a lot of time and money.

The court supplied a long list of actions that might have helped the abrasives company’s case had it taken them.

  • Provide access to the data on a “need to know” basis.
  • Require a signed non-disclosure agreement before anyone, including suppliers and distributors, can access the data.
  • Warn departing employees of their continuing obligations to protect the data and make them return or destroy their copies.
  • Provide secrecy policies that are clear and useful, and train or educate employees about data secrecy and how to fulfill their obligations.
  • Password-protect and encrypt the data, label it as secret and don’t publicly disclose the data.
  • Hire personnel who are qualified to manage confidential data for company’s data systems.
  • Use measures to protect confidential data that are different from those used to protect data that isn’t confidential.

Taken together, these measures not only protect the secrets, but support their legally enforceable status as secrets.