Identifying and protecting trade secrets
is a perplexing, but necessary, task for
employers. Yet some employers may not understand what constitutes a trade
secret, how trade secret is defined legally,
what courts interpret as a misappropriation of trade secrets, or who to work with
to protect them. Often, safeguarding trade
secrets is not a key issue for them. They
may feel that it is unnecessary to protect
their proprietary information due to common misperceptions about trade secrets,
or that only large corporations have to be
concerned about them.
That is not the case, however. Safeguarding trade secrets is a concern for virtually all employers, ranging from those
with one employee to multinational conglomerates.
Smart Business talked with Anne Marie
Finch, a partner with Godwin Pappas
Langley Ronquillo LLP, to learn more about
how business owners can identify and
safeguard their trade secrets and strengthen their competitive advantages, and how
doing so can benefit them.
What constitutes a trade secret?
There is no clear-cut legal definition
according to Texas law. There are only
‘factors to be considered.’ They include
the extent to which the information is
known outside the employer’s business
and by employees and others involved in
his business; the extent of measures
taken by the employer to protect the
secrecy of the information; the value of
the information to the employer and his
competitors; the amount of effort or
money expended by the employer in
developing the information; and the ease
or difficulty with which the information
could be properly acquired or duplicated
by others.
Why should employers consult attorneys to
safeguard their trade secrets?
Often, employers do not have a clear idea
about the definition of a trade secret. The
lack of a definition and the vagueness of
the factors make it difficult for some employers to identify their trade secrets,
let alone protect them. As a result, some
employers try to protect things that really
are not trade secrets and do not bother trying to protect the actual secrets.
Either strategy can be a waste of time and
energy, unless the employers are focused
enough to recognize the exact issue. Attorneys can help clients identify and protect their true trade secrets, and save them
valuable time and money in the process.
How do attorneys help clients identify and
safeguard their trade secrets?
In essence, they provide a plan for
clients in the area of safeguarding their
trade secrets. For example, they can
develop appropriate confidentiality agreements that impress upon employees the
seriousness of protecting trade secrets
and the need for keeping such matters
confidential even after they leave their
employment.
Attorneys can identify areas in which
courts have confirmed that a valid trade
secret exists, refine those areas, advise
clients on the appropriate methods for protecting their trade secrets, and devise
strategies to prevent them from getting
into the public domain.
It is important for employers to remember that if they have a trade secret and they
do not safeguard it, once it gets into the
public domain, it may lose its protection. If
that happens, it is very difficult for employers to put the ‘egg’ back together.
In addition to the steps mentioned above,
attorneys can help employers protect
against trade secret espionage techniques
such as computer hacking, software code-cracking and reverse engineering.
Do tactics such as trade secret espionage
and reverse engineering affect multinational
corporations more than they do small
employers?
They can affect any employer, from a
company with just one employee to an
international conglomerate. As long as an
employer has a trade secret that gives it a
competitive advantage in its market, it can
be susceptible to trade secret espionage
and reverse engineering. That is a point
that employers of all sizes should take into
consideration when evaluating whether it
is worth investing their time, effort and
resources into identifying and protecting
their trade secrets.
What are the most expeditious ways for
employers to protect their trade secrets?
The most common safeguards can be
found in the form of a properly drafted
noncompete clause coupled with a confidentiality agreement, both of which are
binding in Texas.
A noncompete agreement has to be reasonable in terms of geographic area and
narrowly defined to balance the employer’s
interests with the employee’s right to
secure some type of livelihood. A confidentiality agreement is binding as long as
the information the employer seeks to protect truly is confidential.
ANNE MARIE FINCH is a partner with Godwin Pappas Langley
Ronquillo LLP in its Houston office. She is chair of the firm’s
Labor and Employment Section and vice-chair of its Intellectual
Property Section. Reach her at [email protected] or
(713) 425-7437.
