Law Office of Jason H. Rosenblum, PLLC

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Trade Secrets: What Your Employees Should Know **Attorney Advertising**

Most business owners understand the importance of keeping trade secrets, well… a secret. A trade secret can be any unique process, procedure, method, or formula that you use in day-to-day operations that helps to set your business apart from the competition and gives you an advantage in the marketplace. Examples of trade secrets might include a unique recipe, a customer list, or the details of a marketing campaign.
As important as trade secrets can be to a company’s success, very few business owners take the time to educate their employees on the basics of trade secrets and their role in ensuring that the company’s closely held information is handled in a safe and appropriate way.
If you’ve never had a talk with your employees about your company’s policies on trade secrets and what you expect of your team, there’s no better time than the present to start. Here are a few things you’ll want to mention in your conversation:

  1. The Rules Don’t leave your employees guessing about what may or may not constitute trade secrets within your company. Identify the items or processes that you expect to be kept secret and review your policies and procedures for handling such (e.g. keeping certain computer files password-protected, storing documents in a special safe, only providing access to the trade secret to employees that must have access to it, etc.).
  2. Talk About The “Why” Behind the Rules – Most people are motivated by a simple question: “What’s in it for me?” Your employees are probably asking themselves the same question, so take the time to fill in the gaps. When an employee keeps a company’s trade secrets, not only are they helping the company to be successful while preserving their own ability to collect a paycheck or earn benefits, but they are also choosing to be a person who operates with excellence and integrity, even if they decide to part ways with the company down the road. If that’s not enough, see #4.
  3. What Happens When They Leave – It should be made clear that when an employee leaves your company, the only thing that can be taken to their next job is their skill, knowledge, and any other information that is publicly available. Anything else belongs to your company and is off-limits. This also includes identifying what can and cannot be taken outside of the office during the terms of their employment, such as taking home personal files at night or forwarding work emails to a personal email address.
  4. The Consequences – Unfortunately, most employees are unaware of the legal and financial consequences that are tied to misappropriating trade secrets, whether that’s through unintentional actions, theft, a breach of fiduciary duty, or disclosing sensitive information for financial gain. Millions of dollars are awarded in court each year to employers for this very reason, and under the Defend Trade Secrets Act, employers can now bring civil suits in federal and state courts for trade secret misappropriation which could result in the employee being slapped with criminal charges and jail time, monetary damages, or injunctions that forbid an action—such as working with a specific employer.

Even if you have language about trade secrets in your employment contracts, discussing these issues openly and clearly with your team members can help keep the issue of protecting trade secrets at the forefront of their minds and help them to understand what’s at stake. Of course, if you have additional questions about protecting trade secrets in your company or how to create agreements that offer you the most protection when onboarding a new employee or contractor, we invite you to contact our office at 888-666-0062 to schedule an appointment.
DISCLAIMER: The information contained in this article is for informational purposes only and is not legal advice or a substitute for obtaining legal advice from an attorney.