How to protect your trade secrets: a legal expert answers six critical questions.It's no secret that departing employees pose the biggest threat to a company's confidential information Noun 1. confidential information - an indication of potential opportunity; "he got a tip on the stock market"; "a good lead for a job" steer, tip, wind, hint, lead . Protecting this information must be an on-going process. Here are six questions that must be considered: Q: Should I choose patent or trade secret protection? A: Patent protection generally provides the strongest protection against theft because the boundaries of the proprietary information are carefully drawn in the patent, and infringers--even innocent ones--are subject to injunction and even damages. Proving infringement does not depend on proof of a "knowing" and "wrongful" taking. Willful Intentional; not accidental; voluntary; designed. There is no precise definition of the term willful because its meaning largely depends on the context in which it appears. patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. , however, carries a higher penalty of up to treble damages A recovery of three times the amount of actual financial losses suffered which is provided by statute for certain kinds of cases. The statute authorizing treble damages directs the judge to multiply by three the amount of monetary damages awarded by the jury in those cases and attorneys fees. The downside to patent protection, however, is that a patent is of finite duration. By contrast, a trade secret (such as the formula for Coca-Cola) can last forever, so long as it is kept secret. Companies seeking maximum security from use, theft or infringement of their intellectual property might choose a patent. [ILLUSTRATION OMITTED] Q: If I choose trade secret protection, do I have a protection program? A: If you chose this route, you must comply with state law, which, among other things, generally requires that the trade secret not be known in the relevant industry, and that its secrecy be guarded by the owner. A written company policy that is known to and easily accessed by employees is useful not only if litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. arises, but also because it may prevent litigation by educating employees of their legal duties. While it is important that you develop safety measures safety measures, n.pl actions (e.g., use of glasses, face masks) taken to protect patients and office personnel from such known hazards as particles and aerosols from high-speed rotary instruments, mercury vapor, radiation exposure, anesthetic and to protect your valuable confidential information, it is likewise important that you not go overboard o·ver·board adv. Over or as if over the side of a boat or ship. Idiom: go overboard To go to extremes, especially as a result of enthusiasm. in designating information as "confidential." Q: Should I have specific agreements with my employees? A: Agreements with employees having access to trade secrets can be very useful. A written agreement has evidentiary ev·i·den·tia·ry adj. Law 1. Of evidence; evidential. 2. For the presentation or determination of evidence: an evidentiary hearing. Adj. 1. value in court. The very act of signing may impress upon employees the importance of their obligations to protect your valuable business information. Also, a company may designate documents and information in an employment agreement as confidential and proprietary and enforce that agreement in court even though the designated information does not meet any of the legal tests Legal tests are various kinds of commonly-applied methods of evaluation used to resolve matters of jurisprudence.[1] In the context of a trial, a hearing, discovery, or other kinds of legal proceedings, the resolution of certain questions of fact or law may hinge on the for the existence of a trade secret. Q: Should the agreement contain a covenant not to compete covenant not to compete n. a common provision in a contract for sale of a business in which the seller agrees not to compete in the same business for a period of years or in the geographic area. This covenant is usually allocated (given) a value in the sales price. ? A: Such covenants are the single most effective tool to prevent departing employees from applying your trade secrets to the benefit of one of your competitors. To be enforceable, however, they must be designed to protect a "reasonable competitive business interest." Entering into "non-competes" in order to deprive one's competitors of skilled or experienced employees is not such an interest. Nor is limiting employee mobility to minimize salaries a valid interest. A reasonable foundation for a non-compete agreement is the protection of confidential and proprietary business information, such as customer lists and requirements, business formulas and processes and plans. Q: What do I do when a key employee drops off a resignation? A: You should have a firm policy of conducting exit interviews. The interview should be used to remind the departing employee of his or her confidentiality obligations (or non-compete obligations). Afterward, you should evaluate the risks associated with the particular departure: the level and responsibilities of the departing employee, the identity of the new employer and prospective job title and responsibilities. Q: When do I pull the litigation trigger? A: The Michigan Uniform Trade Secrets Act authorizes a court to grant an injunction against actual or threatened misappropriation misappropriation n. the intentional, illegal use of the property or funds of another person for one's own use or other unauthorized purpose, particularly by a public official, a trustee of a trust, an executor or administrator of a dead person's estate, or by any of trade secrets. Thus, an employer need not and often must not wait until it has actual evidence of wrongful disclosure before filing suit, because by then the harm would already have occurred: your secret formula is on the Internet; your customer are lost and you may never be able to win them back or prove all of your losses. Prior to pulling the trigger, however, you should always engage in a frank discussion with the litigating attorney comparing the potential costs and benefits. Barbara Mandell is an expert in intellectual property and partner in the Litigation Department of Detroit-based Honigman Miller Schwartz & Cohn LLP LLP - Lower Layer Protocol , a member of the Detroit Regional Chamber. [ILLUSTRATION OMITTED] |
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