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To maintain information as an enforceable trade secret, a company must take reasonable steps to keep the information secret. The most common way to accomplish this is to ensure that before anyone has access, or even potential access, to the information, that he or she executes a written confidentiality agreement in which they acknowledge that they will have access to trade secret information and agree not to use or disclose that information. Companies should also consider prohibiting employees from using personal computers or devices for company work and taking steps to prevent employees from copying confidential company documents and files, such as limiting access to such documents and files or limiting the ability to copy or print such documents and files.
If a company suspects trade secret misappropriation it should act quickly. Not only is there usually a statute of limitations limiting the time period during which claims may be brought, but quick action is critical to preventing unauthorized use or dissemination of the trade secret information. For example, Green Leaf Lab, LLC recently filed a lawsuit against 2 River Labs and a former employee of Green Leaf. The former employee was alleged to be exposed to secrets of Green Leaf and also alleged to have copied Green Leaf’s confidential methodologies and procedures from a Green Leaf USB drive and brought them to her new employer 2 River Labs which allegedly used them. One of the facts alleged by Green Leaf was that the former employee signed a written confidentiality agreement. In another recently filed case, My Vape Order, Inc., alleged to be a market leader in the vaping industry, accused Eric Upchurch, an independent contractor, of trade secret violations, alleging that Mr. Upchurch learned of My Vape’s trade secrets related to E-juice/E-liquid formulas, and disclosed them to a third party. Again, the contractor's execution of a confidentiality agreement was a key factor in My Vape’s allegations.
When conducting due diligence of a target company’s trade secrets, one should look at a variety of issues, including the following:
•What practices does the company have in place to safeguard its confidential information?
•Does it require employees to execute confidentiality agreements? What about contractors, vendors, officers, directors, consultants, etc.?
•Does it control and limit access to the trade secret information – either physically or electronically?