Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Preparing for trade secret litigation starts long before the suit is filed. Every employer must assume there will be assaults on its commercially valuable business information, through departing employees as well as unscrupulous outsiders. Reputable businesses also must be vigilant against unintended or unauthorized use of a competitor’s trade secrets. This article discusses issues for which a business must be prepared before it sues or is sued for trade secret misappropriation. To enforce its trade secrets, a business must show that it owns information that gives it an advantage over competitors and is not generally known to the public. To prove that a business has maintained its business information as trade secrets, proper precautions must be taken. These include nondisclosure and invention-assignment agreements for all employees and contract workers, as well as nondisclosure agreements with consultants, vendors and other outsiders. Other precautions include limited access to work areas, warning notices on documents, computer security measures, and proper entrance and exit interviews for employees. Businesses with Web sites should monitor what is placed on them and ensure confidential information on Intranet sites is not accessible from an Internet site. Letters also should be sent to the new employer of a departing employee about the trade secret obligations of the departing employee. Companywide educational programs should be held periodically to remind employees of their obligations. Employees also should be educated about the importance of being careful what is said in e-mails. E-mails often are treated as extensions of personal conversations, and many people are not mindful that they are preserved for anyone to read in the future. Some of the most damning admissions in suits have been found in e-mails. One of the most potent weapons for a business that is losing a key employee to a competitor is the inevitable disclosure doctrine. This doctrine allows for injunctive relief when an employee’s new job would inevitably lead him or her to rely on the former employer’s trade secrets. Although some states such as Texas do not recognize the doctrine, its courts have held that a former employee may be enjoined from using the former employer’s confidential information when use or disclosure is probable. On the other hand, courts are reluctant to prevent an employee from changing jobs and will carefully define injunctive relief. EXPENSIVE DISCOVERY An area where a would-be litigant must be prepared is the discovery of electronic forms of information storage, such as archived e-mails, backup tapes and disks, and even erased documents that still might be available on PC hard drives. This type of discovery can be tremendously expensive and time-consuming. Care should be taken to preserve such storage media after a suit is filed so that a company is not charged with destroying evidence. These are issues that are becoming more commonplace. Every litigant can expect to have to respond to broad-ranging discovery requests. Companies also should take preventive measures to minimize the likelihood of being sued for alleged trade secret misappropriation. When a new employee is hired, management is not always aware that he or she might be bringing confidential information to the job. Caution should be exercised when hiring an employee that will work with the same technology area as his or her former employer. If the new employee brings documents or electronic information from the former employer, they should be confiscated and returned. Companies should be careful how they receive information from customers or other outsiders. A strategy should be developed to screen these ideas and decide whether and how they will be considered. Some companies will enter into a nondisclosure agreement with no obligation to use the idea, while others will refuse to consider an idea unless the submitter waives all rights to the idea except for any patents that the submitter might receive. A proactive approach to protecting a company’s interests before litigation is filed can save substantial money and resources later. It never is too late to take an accounting of how trade secrets are protected and whether barriers are in place to prevent another’s trade secrets from being used.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.