Trade secrets must be carefully protected

On Behalf of | Mar 25, 2019 | Non-Compete Litigation, Trade Secrets |

Many businesses’ success depends on protecting information as trade secrets. This can be a special sauce for a lunch counter’s signature sandwich or details of relationships with business partners. There are a variety of laws based on the Uniform Trade Secret Act that protect such intangible assets as trade secrets, but the business needs to do its part as well.

This was made crystal clear by a federal judge’s ruling in the Northern District of Illinois. The plaintiff alleged that a longtime president left a manufacturing company and took sensitive information with him. He started a competing company with the plaintiff’s suppliers, list of customers and pricing model. He also hired another of the plaintiff’s former employees who brought more information with her. The plaintiff alleged that the information amounted to trade secrets, but the judge saw it very differently. He ruled that the information did not qualify for the following reasons:

  1. The trade secret must be secret enough that the information has value
  2. The business must take steps to protect those trade secrets

The plaintiff might have had a case for trademark infringement, but the judge told the company in a stinging rebuke that its data security “was so lacking that it is difficult to identify the most significant shortcoming.” The plaintiff’s failings included:

  • Taking steps to protect information and/or restricting access to a need to know basis
  • Using non-disclosure or confidentiality agreements
  • Training employees on how to determine what is confidential or sensitive information
  • Asking departing employees to return or destroy any sensitive information
  • Labeling documents as confidential or proprietary

An attorney can set up security protocols

An experienced intellectual property lawyer can help companies keep their information from walking out the door. It starts with simple things like locking a filing cabinet, drafting contracts and addressing the list above, but the needs of each business are unique and so should be the strategies provided by the attorney.