A federal judge in Northern Illinois recently issued a painful lesson to a business owner. The plaintiff and their attorney alleged that a former longtime company president and a salesperson left the company with trade secrets that they used to start a new company that was a competitor.
According to the National Law Review, the case involved the president who left the company with a flash drive filled with files of product pricing, a list of customers and information about suppliers’ pricing. The salesperson subsequently left with additional information she thought “would be helpful” to the new company.
The judge disagreed with the plaintiff based on the definition of a trade secret. Defining factors of a trade secret include:
- Information that is valuable enough that it is kept a secret
- Information the business took reasonable steps to ensure the secrecy of
Mistakes were made
It turns out that the plaintiff made several mistakes in not ensuring the secrecy of keeping their company’s information. The lapses included:
- The plaintiff did not draft a non-confidentiality or non-disclosure agreement.
- The plaintiff did not draft a policy regarding the secrecy of company information beyond the general admonition of not discussing this information outside of work.
- There was no company training regarding sensitive or confidential information.
- The plaintiff did not ask employees if they possessed any sensitive or confidential information or instruct them to return it.
- The plaintiff did not train their IT manager on security protocols.
- The plaintiff did not restrict information or grant access on a need-to-know basis.
- The plaintiff did not label information as proprietary, sensitive, or confidential.
These are issues that can be avoided
A knowledgeable intellectual law attorney can help clients draft effective regulations, contracts, rules, and protocols for protecting a business. These help ensure the ongoing success of a business and can be the difference between winning in court and creating one’s biggest competitor.