The estimated $50 billion annual loss to Fortune 1000 companies due to trade secret theft likely underestimates the magnitude of total economic damage, as most targets of such espionage are small and mid-size companies.
Managing your trade secrets should include an audit to identify information and technology that qualifies for protection and to carefully assess what information or know-how gives your company its competitive advantage.
Trade secrets are broadly defined and can cover almost any type of information imaginable. Some key considerations in identifying your trade secrets are:
The extent to which information is known both within your company or by outsiders; The extent of measures taken to maintain its secrecy; and How readily the information could be properly acquired, duplicated or reverse-engineered by others.
Remember that your trade secrets are just as dynamic as your business. New secrets are developed as your processes and techniques change, while older information may be rendered obsolete. You should therefore audit your trade secrets annually.
Trade secret laws can help you if your secret is stolen, but they don't put the horse back in the barn. Take reasonable measures to protect the secrecy of your trade secrets by controlling who has access to such information and how the information is stored, labeled and maintained. The level of burden on your company to safeguard the secrecy of your trade secrets depends both on the nature of the information as well as the size and sophistication of your business.
Develop confidentiality policies and educate your personnel about the importance of trade secrets, their management, and professional consequences if they do not keep them confidential. Employees and third parties with whom you do business should sign confidentiality agreements.
Implement creative barriers to protect trade secrets, eg, break a job into parts so that no single employee, division, or supplier knows all the parts of a trade secret.
Teach employees to look for signs of corporate espionage and provide a mechanism to report irregularities.
Secure the physical premises as well as computers of your business and restrict access of both employees and visitors to areas where trade secrets are kept.
Legally monitor business-related channels of communication.
Conduct checks to ensure compliance with corporate policies relating to confidential information.
Most importantly, hold exit interviews with departing employees, secure the return of all information and electronic equipment, and remind them of their obligation to maintain the confidentiality of your trade secrets.
Controlling and protecting the trade secrets which make your business unique among your competitors is an essential investment in your business' growth and sustainability in the marketplace.
James F Ewing is a senior counsel with Foley & Lardner LLP and a member of the firm's Biotechnology & Pharmaceutical Practice Group and the Life Sciences and Food Industry Teams. He can be reached at 617 342 4088 or by e-mail at firstname.lastname@example.org.
Michel Morency is a partner with Foley & Lardner LLP and a member of the firm's Biotechnology & Pharmaceutical and Private Equity & Venture Capital Practice Groups, as well as the Life Sciences, Emerging Technologies, Food and Nanotechnology Industry Teams. He can be reached at 617 342 4080 or by e-mail at email@example.com.
Sharon Mollman Elliot is a partner with Foley & Lardner LLP and a member of the firm's General Commercial Litigation, Labor & Employment and Appellate Practices. She can be reached at 608 258 4786 or by e-mail at firstname.lastname@example.org. email@example.com.