It has become cliché to say that we live in an era of widespread technology use. Yet, in spite of the increased use of technology in businesses, many companies have done little to revise their policies and procedures that address the protection of trade secrets that are stored digitally. In order for these digital assets to qualify for trade secret protection under the law, a company must take reasonable efforts to maintain their secrecy. Companies that store their trade secrets in digital format should be sure to take some of, if not all, of the following steps to ensure their trade secrets receive proper legal protection.
Businesses should establish a response team to address trade secret breaches. These teams should have plans in place to address a myriad of situations that may arise, and should be comprised of members from multiple disciplines, at least including legal, technical, human resources, and key management. These teams would be responsible for drafting the business’s corporate policies related to trade secrets, drafting contingency plans in the event of a breach, maintaining an inventory of current trade secrets, and training employees about trade secrets and the procedures related to them.
Companies should design corporate policies to reflect the high value of trade secrets and the gravity of unauthorized disclosure of those secrets. Ideal corporate policies provide employees with distinct guidelines as to what may or may not be disclosed, and impose specific consequences for failing to observe those guidelines. Additionally, maintaining strong corporate policies on trade secrets can provide protection in the event of litigation, as the presence of strong corporate policies are indicative of reasonable efforts by the company to protect its trade secrets.
Confidentiality agreements, with both employees and third parties, are also important tools for protecting trade secrets. If a company discloses a trade secret to a third party who is under no obligation to keep that information confidential, the result is a loss of intellectual property protection for that trade secret. To protect from this result, it is imperative that all dealings with third parties involving the disclosure of trade secrets be premised upon a confidentiality agreement. Likewise, confidentiality agreements are necessary with all employees who deal with trade secrets on a daily basis.
Finally, a company should implement electronic and physical security protections for trade secrets. Access to trade secret information, stored physically and/or electronically, should be restricted to employees who “need to know.” Employee access (and attempted access) to trade secrets should be closely monitored and documented, with such documentation maintained indefinitely. Mobile devices that have access to sensitive company information must have appropriate passwords and other security protections, and should include software that allows the mobile device to be wiped in the event that it is lost or stolen.
In light of the ongoing movement toward maintaining trade secrets in digital form, it is imperative that businesses take the necessary steps to protect these intangible assets. By having proper policies, procedures and a response team in place, businesses can: (1) reduce threats to their trade secrets; (2) move quickly in response to threatened or actual breaches and misappropriation; (3) minimize the risk of irreversible damages; and (4) fully avail themselves of legal protections under applicable law.