Confidential information can play a key role in a company’s business and market position. For executives, protecting these assets begins with knowing their legal limits and what choices you have for defense.
Identifying protected trade secrets
Not every internal document or business practice counts as a trade secret. The material must have real or potential economic value because it is not widely known to the public or to others who could benefit from learning or using it.
Formulas, source code, pricing methods, customer data and strategic plans can meet this standard, depending on the facts. You must also put in place safeguards that are reasonable under the circumstances, such as limiting access, securing files and requiring proper confidentiality agreements. Without steady handling, even sensitive information can lose its status as a trade secret.
Building reasonable disclosure safeguards
The steps you choose should reflect the type of information involved, how your business handles it and who needs it. Common measures include:
- Limiting sensitive files to people who need them for their work
- Using written agreements that cover company secrets without restricting workers’ general skills or experience
- Providing regular training on how to label, store and share trade secrets
- Securing digital files with encryption, strong passwords and multifactor authentication
Records of training, signed agreements and account changes can show how the organization followed its procedures. They may also provide evidence that the business took reasonable steps to keep the information secret.
Understanding California noncompete limits
California treats nearly all employment noncompete clauses as void. This holds true even if the wording is narrow or the employee signed the document in another state.
Confidentiality terms can still guard trade secrets. The company cannot write them so broadly, though, that they stop someone from taking another job or working for a competitor. Limited exceptions do exist but they usually do not cover a standard employee agreement.
Responding to suspected misappropriation
When you suspect that a trade secret has reached a competitor or another outside party, preserve relevant digital records before they are changed or deleted. Access logs, download histories and work emails can help show what material was involved, who viewed it and where it went.
A civil claim is available under state law when the facts support misappropriation. Federal law provides another possible route when the trade secret relates to a product or service used in, or intended for use in, interstate or foreign commerce.
A court can issue an order stopping further misuse and award damages for proven losses. Mere suspicion is not enough, so confirm that the evidence points to an improper act before filing.
Thakur Law Firm, APC has successfully defended numerous high-stakes misappropriation of trade secret cases including prevailing on preliminary injunctions in multiple industries and dispositive motions including motions for summary judgment in litigation. In addition, TLF has counseled employers on best practices to protecting trade secrets and enforcing viable claims under the liberal policies on non-competitive terms being unenforceable in California.