Stop Your Company’s Trade Secrets From Walking Out the Door
Only by determining who has access to your company’s trade secrets can you protect them.

By Ken Mayer

One of the most critical—yet often overlooked—assets of any business is its intellectual property and trade secrets. These needn’t be as sophisticated as a proprietary computer software program or as famously secret as Coca-Cola’s formula, but they can include customer lists, business strategies and techniques, policy manuals, and pricing information. Protecting your company’s intellectual property shouldn’t rest just with your lawyers. HR managers can greatly assist by adopting a few simple practices.

What Is a Trade Secret?
The more secret the information, and the greater the competitive edge it provides, the more likely it’s worth safeguarding as a trade secret. There’s no absolute rule to go by, but consider these:

•    How much of the information is known outside the company
•    How much is known by employees and others involved in your business
•    What measures you’re taking to guard its secrecy
•    How much effort or money it took for your company to develop it
•    How hard it would be for others to acquire or duplicate it

Keeping Your Secrets Secret
When you’ve identified your company’s trade secrets, take action to protect them. Only those people needing access to important information should be able to get it, so create an internal employee policy dealing with the use of confidential information. Control access to facilities and areas containing trade secrets, and lock up spaces where confidential information is stored. Also, limit external access to confidential documents by requiring that legal counsel pre-approve information disclosures to third parties.

Whenever you have to share trade secrets, the third party should sign a nondisclosure agreement stating the information is confidential and proprietary to your business. 

Accordingly, they are not allowed to disclose or use the proprietary information even after their business relationship with your company ends.  

Also incorporate nondisclosure language into employment applications and job descriptions for sensitive positions. Ask key employees to sign a non-compete agreement that contains language specific to the trade secrets. A court will generally uphold this type of agreement if it is limited in duration and geographic scope and designed to protect legitimate business interests.  

When a key employee leaves, remind him or her during the exit interview of their obligation to maintain confidentiality. During the interview, use a checklist to ensure all intellectual property has been returned. And update passwords and other security measures after the employee departs.

If necessary, send a letter to the former employee’s new employer, advising them that this person had access to trade secrets as well as confidential information and has a continuing duty not to disclose it. But don’t overstate your company’s rights to confidentiality or cast the former worker in a negative light.

Ken Mayer is President of The Mayer Group, Inc., an Overland Park firm specializing in management advisory and coaching services, organizational performance and human resources management. He may be reached at (913) 327-1900.