How to Series: 6 Tips on How to Protect Your Trade Secrets

Transcript

What is a trade secret?

Hi, I'm Regina Campbell from The Campbell Law Group, and today we're going to bring you another how-to series. Today we're going to talk about six tips on how to protect your trade secrets.

Now, often people say, "Regina, what is a trade secret?" It's not any one specific thing. It can be a design, it can be a process, it can be a practice, it could be a pattern or a compilation of information that's important specifically to your company, such as a client list, or a combination of client pricing and demographics that are not generally known. This is what courts, for the most part, are going to look for to find whether or not a trademark exists.

We're going to talk about a couple of the other points the courts will go through to see if you as a company have also treated this product, information, processes or improvements as secret and protected, in order to determine whether or not it's subject to protection. So these are six tips to try to ensure that you hopefully get enforcement by the courts, and that you do the best you can to protect your trade secrets and anything that you've created.

Tip 1: Register it

Step number one: you want to register your trade secret, if it's a copyright, trademark name or a patent, with any state, federal and international entities that might be necessary where you're going to be doing business. Also keep a close eye on refining that registration over time, as your processes and your patterns and so forth, your trademark, may actually have upgrades, so to speak, or amended information that makes it necessary to include, to fully protect your trade name or your trade secret.

Tip 2: Use NDAs and confidentiality agreements

Number two: NDAs and confidentiality agreements are strongly encouraged in the employment setting, independent contractor setting, vendor or even a partner setting. There are often some gaps in the law that do not provide for protection. For instance, some of these laws were written in the '80s and '90s in the United States, depending on state and federal. Some of the state legislatures have caught up with technology, but some of the federal ones have not, and they're behind on their definition of what is included and not included in the protection of certain acts.

So to ensure against internal misuse, for instance, by an employee or an independent contractor, these agreements go a long way to make it very, very clear that under no circumstances is this employee, vendor or independent contractor allowed to use this information other than for their duties or the services they're there to provide to your company, and also what they can do after they leave your service. Very, very important. Often these provisions are also put into employment agreements, just to round off a good, well-planned employment package.

Tip 3: Physical and cyber controls

Number three: physical and cyber controls. In other words, where is your information? Do you have your trade secrets, your improvements, your patterns or your process written in documents? If you do, it's very important to put these documents away in a vault, or in some kind of drawer with a key. Courts are basically going to look to make sure that you have reasonably protected your own information that you say is sensitive. If this information is sitting out, for instance, on a receptionist's desk, where a pizza person can potentially grab it or look at it, it's more likely the court is going to find that it's not subject to protection, and that you yourself did not treat it with that level of scrutiny or concern. So why should the court do so?

Cyber is just as important: in other words, user management and user access. A lot of courts have looked at how you've allowed your employees to have this information, and whether you've tailored it specifically to the employee's needs, so as not to give them too much access to information that they do not require and that is not part of their job function. In other words, if a receptionist has the client list and client pricing and all the strategies behind the company's plans, and they don't actually have a use for this information, the courts are likely to find that you yourself have not treated it with the secrecy and protection it needed, and it will not likely be upheld.

So it's very important to tailor security plans and protocols, and always look at them to ensure that you are showing protection: "This is very sensitive to me. I've put it behind a vault. I've put it behind a firewall. I have limited access to it." Those are all the things that the court's going to look at.

Tip 4: Work ownership agreements

Number four: work ownership. Sometimes people know it as work-for-hire provisions or agreements. Whether it's with an employee, independent contractor, a vendor or a partner, it's very, very important for you to make it clear who owns the intellectual property. So if someone has taken a pattern that you've created, which is your trade secret, and an employee or a vendor has improved the pattern, who owns the improvement? It's very important that these agreements make clear that it belongs to you. Most people think that's a given, but it really is not. Sometimes there becomes a question as to ownership: who owns the incremental additional piece?

Tip 5: Segregate the information

Number five: I think another way to protect your trade secrets and information in general is to segregate the information. For instance, say you have six different levels to the process. Maybe have one employee handle each part of the process, so there are six different employees, and no one employee actually knows all of the information about the entire process.

Tip 6: Have a response plan

Number six: a response plan. Have one in place. That includes, in your employee policies, that employees, independent contractors, vendors and partners have to return all the company's property as soon as they leave or terminate services or the partnership. Make sure they have to create a certificate of destruction, to ensure they don't have a copy on their phone or on their home computer. There's no reason for them to have this information once they've left your services or your partnership. It makes it a very clear-cut line that this person cannot have this information and use it for any reason.

Also use what they call internet trolls. A lot of people don't like them, but you want to make sure your information is not being improperly used by another on the internet. Engage software that helps locate this information. There are firms that do this, as well as the proverbial internet troll, that can also assist in this. And then, of course, have a plan. Have a cease and desist letter ready. Observe and document everything that might be out there that you believe is improper. Move on the cease and desist letter to ask this person to stop and to immediately return everything to you, and have a game plan and a time plan to enforce your rights, so it doesn't look like you've been sitting on them.

Well, hopefully this has been helpful, and I hope our other how-to series have been helpful. If you haven't seen them, please tune in to our YouTube channel and become a subscriber. Also, on our Apple Podcasts channel you can see our other Legal Zone podcasts. I hope they're helpful to you as well, as well as our Campbell Corner, which talks with different people about current events and things that might be of interest. And follow us on our social media accounts. Thank you, and I hope this was helpful. Thanks.