Eight steps to secure trade secrets

AuthorPamela Passman
PositionPresident and CEO, Center for Responsible Enterprise And Trade (CREATe.org), Washington DC, USA, and former Corporate Vice President and Deputy General Counsel, Global Corporate and Regulatory Affairs, Microsoft Corporation

However, the greatest threat may be already within a company. In more than 85 percent of the trade secret lawsuits in state and federal courts of the United States, the alleged misappropriator was either an employee or a business partner. That is the startling finding of A Statistical Analysis of Trade Secret Litigation in Federal Courts PDF, A Statistical Analysis of Trade Secret Litigation in Federal Courts, which is believed to be the first statistical study on the subject.

How do you secure company trade secrets from both external threats and potential thieves already inside the company?

Increasingly, the courts are saying that firms need to take “reasonable steps” to protect confidential corporate assets, and these efforts include not only securing computer networks but also embedding trade secret protection into business operations and processes.

Determining the extent of “reasonable steps” can be challenging since governments have been vague about the term’s definition. Laws and legislation also continue to evolve. However, research into court cases reveals the key elements of an effective trade secret protection plan.

Protecting corporate crown jewels

The Statistical Analysis of Trade Secret Litigation in Federal Courts found that confidentiality agreements with employees and business partners were the most important factors when courts decided companies had taken reasonable measures to protect trade secrets. However, winning suits reveal that companies can and should take a number of additional steps to build a case for legal redress in the event that their corporate crown jewels are compromised.

The eight categories of a comprehensive protection plan include:

creating agreements, policies, procedures and records to establish and document protection;

establishing physical and electronic security and confidentiality measures;

assessing risks to identify and prioritize trade secret vulnerabilities;

establishing due diligence and ongoing third-party management procedures;

instituting an information protection team;

training and capacity building with employees and third parties;

monitoring and measuring corporate efforts;

taking corrective actions and continually improving policies and procedures.

  1. Implement business procedures to augment non-disclosure agreements

    As the study confirmed, confidentiality and non-disclosure agreements with employees and business partners constitute a great first line of defense and have won praise from...

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