Magazine article Security Management

Your John Hancock, Please

Magazine article Security Management

Your John Hancock, Please

Article excerpt

VIRTUALLY EVERY BUSINESS--large or small-faces the challenge of protecting its trade secrets from dishonest employees and competitors. For many businesses, economic survival may depend on the ability to secure confidential, proprietary information from competitors.

However, safeguarding corporate trade secrets often proves costly and difficult, and management is not assured a sympathetic ear from the courts. Much of the judiciary is reluctant to restrict the flow of economic data, fearing company monopolies over crucial business information.

But management is not helpless. By making use of employee confidentiality agreements, it can take an important step in safeguarding corporate secrets. Here are some simple steps to follow:

First. Make sure the information is confidential. Before taking steps to secure its organization's trade secrets, management should ensure that the information is both proprietary and confidential. Management should make sure the secrets belong to the organization and are known not to the world at large but only to a small, select group of persons in the organization.

To convince a court the secrets are indeed secrets, the rightful owner should be prepared to demonstrate the following:

* Expenditure of money and resources. It's not enough simply to lay claim to a trade secret. A rightful owner must show that it has expended money and resources to ensure the secret's development and secrecy. In short, the owner must be able to show that the data in question is the result of its effort and not that of others. The owner must further show that to allow a competitor or other third party to reap the secret's benefits without having expended any money or resources to develop it would constitute an affront to equity.

* Employee awareness. A trade secret is no secret if employees are not aware of its confidential and proprietary nature. Before the courts enforce an owner's right to trade secrets, they want to be assured that the owner made employees aware of the secret and proprietary nature of the information in question.

* Advance notice. The courts also require the owner of trade secrets to tell prospective employees that, as a condition of employment, they must agree to safeguard the confidentiality of the proprietary data they have access to in the course of their employment.

This advance notice serves three key objectives. Employees find it difficult to argue later that they were ignorant of the confidential and proprietary nature of the data in question. The notice helps safeguard any information the employee may have access to in the course of employment (especially valuable if the employee is a mole for a competitor). And the notice confirms the organization's commitment to safeguard the confidential nature of the information.

Second.- Understand how confidentiality agreements work. Some courts extend trade secret safeguards to an organization's employees even in the absence of a confidentiality agreement. However, such agreements are still worthwhile as deterrents, and they close loopholes in existing trade secret laws. Moreover, they cost little or nothing to use.

For an employee confidentiality agreement to prove effective, it should provide for the following:

* Confidentiality. A confidentiality provision would prohibit an employee from using or disclosing any trade secrets he or she may have had access to in the course of employment. …

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