Trade secrets come in many forms. They commonly include customer lists, programming data, pricing information, employee compensation and benefits, cost matrices and secret recipes. Whatever information a company develops or acquires for the purpose of gaining a competitive edge that it does not share with others will likely fall within the definition of “Trade Secret.”
The most important aspect of your company’s program to protect and exploit its “trade secrets” is keeping that information a secret. Locked doors, computer passwords, employment agreements, and other devices are used to secure and maintain the secrecy of certain information. Despite having these systems or agreements in place, there are several ways in which companies and individuals reveal their trade secrets to the world. And by revealing this information, it may no longer be considered a secret. There are three common ways that companies or individuals, sometimes unwittingly, share their trade secrets with their competitors.
Company Websites & Social Media
Most companies and individuals have an Internet presence. Web pages and social media sites can be great advertising tools. In litigation, however, these tools can become effective sources of information for your adversary. Web pages and sites that are not password protected are open to the public. Information placed on those pages becomes public information and is no longer considered confidential or secret information. Types of information commonly found on a company’s website include customer names, vendor names, pricing information, and contract terms and conditions. If your company has published this information online, it will be difficult, if not impossible, to enjoin someone from using that information under a trade secret theory of liability. If you want to keep something secret, do not post it to your website or social media account.
Lack of Non-Disclosure Agreements
If you plan on sharing trade secrets or confidential information with vendors, individuals, or companies outside of your own employees, then it is best to have a written non-disclosure agreement in place. Voluntarily providing pricing information, formulas or other information to persons who work outside of your company can result in waiving that information’s confidential or trade secret status.
In non-compete litigation, for example, the lack of non-disclosure agreements with other entities commonly comes up when trying to enjoin a former employee from using trade secrets. By contacting a customer identified on the company’s web page, the former employee’s counsel could simply call up the customer and, if there was not a non-disclosure in place, learn the pricing, terms and other information that the company freely gave to the customer. With enough customers contacted, it could become very hard for the company to establish the secret nature of the information it claims is a trade secret. If you intend to keep pricing, terms or other information that you commonly share with your customers a secret, it’s best to obtain a non-disclosure before sending bids or offers.
Judicial Pleadings
In the United States, courts operate with a high level of transparency, which is a great public asset of the justice system. As such, unless a pleading is filed under a protective order or some other instrument or applicable statute that preserves the confidential nature of the information contained in filed documents, documents filed in state and federal courts are considered to be public records.
Public records are not confidential. If you voluntarily file your confidential trade secrets with the court, then (with some statutory exceptions related to social security information and other personal information) you have waived the confidential nature of the information contained in the filed documents. When enforcing your trade secrets or confidential information in court, be sure to have legal counsel address with you how to properly protect the confidential nature of your information while still obtaining the relief you seek.
Takeaways
Creating or obtaining trade secrets can be time consuming and costly. The rewards for building a better mousetrap, however, are worth the cost. Do not go through all the trouble of creating a competitive advantage then give that highly valuable information away. Keep confidential information off of your websites and social media accounts. Sign non-disclosure agreements with outside vendors, clients, contractors and employees. Avoid filing trade secrets in an unprotected manner in court. Avoiding these common missteps will help maintain the secrecy of your confidential trade secrets.