Costs associated with fighting the misappropriation of trade secrets, such as legal fees.<\/li>\n<\/ul>\nRecognize Signs of Misappropriation<\/p>\n
High employee turnover can lead to the misappropriation of trade secrets. A classic example is when a sales employee leaves a company, takes a highly protected client list with him and then uses that client list when working for a new employer, Crane said. <\/p>\n
“We often see other employees following that first employee in order to go where the business is going,” he added. “So, the bad actions of one employee can begin to snowball into loss of both customers and valued employees.”<\/p>\n
High customer turnover and strange computer usage or access by employees are other signs of misappropriation, he added.<\/p>\n
Review Nondisclosure Agreements Carefully<\/p>\n
The FTC’s proposed rule would not prohibit most nondisclosure agreements, said Carsten Reichel, an attorney with Norton Rose Fulbright in Washington, D.C.<\/p>\n
But employers should take a good look at their current nondisclosure agreements. In its proposed rule, the FTC provided an example of contractual terms that may be de facto noncompete clauses. One example was a nondisclosure agreement between an employer and a worker that was written so broadly that it effectively precluded the employee from working in the same field after the worker left the employer, said Robert Milligan, an attorney with Seyfarth in Los Angeles.<\/p>\n
When drafting new nondisclosure agreements, companies would be wise to make sure that the agreements are not so broad in scope that they are viewed as noncompetes under the FTC’s proposed rule, Milligan said. Employees who have access to a company’s trade secrets should be required to sign nondisclosure agreements, Blonder said.<\/p>\n
The categories of information subject to the nondisclosure agreement should be tailored to the company’s business and specific enough so that the employee understands what needs to be kept secret, Milligan said. The information the company is seeking to protect should not be publicly available information. <\/p>\n
In the agreement, there should be exclusions for information already known to the employee\u2014such as generalized knowledge and skills\u2014and information the employee has a legal right to disclose under state or federal law, Milligan noted. For example, California and Washington have laws prohibiting employers from using agreements that don’t allow the disclosure of conduct the employee believes is unlawful, such as illegal harassment or discrimination.<\/p>\n
The agreement also should specify that the employer will be irreparably harmed if there is a breach, and it should provide recourse in court or arbitration for breaches.<\/p>\n
Take Other Preventive Steps<\/p>\n
To prevent misappropriation, limit access to trade secrets to those with a need to know and keep any trade secrets material stored and handled in a secure manner, recommended Alex Lee, an attorney with Einhorn, Barbarito, Frost & Botwinick in Denville, N.J.<\/p>\n
Physical areas of the workplace where employees are working with trade secrets should have limited access, said Leonard Samuels, an attorney with Berger Singerman in Fort Lauderdale, Fla.<\/p>\n
Crane said other prevention steps include:<\/p>\n
\n- Regularly auditing company computer usage.<\/li>\n
- Requiring regular password changes.<\/li>\n
- Distributing encrypted thumb drives that can be used only on internal systems and blocking any thumb drives not provided by the company.<\/li>\n<\/ul>\n
Educate Workers<\/p>\n
“It is not uncommon to see circumstances where employees are under the honest mistaken impression that if they personally created or worked on a project or document, that it belongs to them and can be taken or used without the consent of the employer,” Lee said.
Misappropriation sometimes can be avoided by making sure employees are educated about the employer’s policies. <\/p>\n
Employers should make it clear, particularly at exit interviews, “that any work product by an employee on behalf of the employer belongs to the business rather than the employee,” Lee said. <\/p>\n
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