Protect your secrets Featured

5:41am EDT July 30, 2006
Somewhere between James Bond’s brand of espionage and the emotions of a loyal employee jumping ship lie situations that give rise to trade secret disputes.

The law recognizes both wrongful taking and wrongful use as actionable. These wrongs and their subjects overlap the legal disciplines of intellectual property, employment and unfair competition.

“The best approach to trade secrets is to think about them early, identify the subject, and figure out how to protect them with security and legal measures,” says David Brezina, a partner at Barnes & Thornburg LLP. “When a problem occurs, don’t pigeon-hole it but explore all alternatives.”

Smart Business spoke to Brezina about how to protect your company’s valuable trade secrets.

How are trade secrets pigeon-holed?
By pigeon-holing I mean identifying a particular area of the law that you think covers everything about your trade secrets.

When employees take trade secrets as they leave, you might initially react by categorizing the problem in a particular area of law. But general knowledge and skill may well be transportable to a new job, absent other limitations. You might call an intellectual property lawyer, an employment lawyer or a commercial litigator. Seeing all three points of view will help.

What can be protected?
With intellectual property, the general rule is that you can’t protect an idea, just the embodiment of an idea. You can’t protect an idea for a cop show about a street-smart veteran cop and his wisetalking rookie partner, because all cop shows have that. But if you write a specific script and someone takes too much, that’s copyright infringement.

It’s the same with trade secrets. They’re not a piece of protectable property unless they rise to certain standards. General skills, such as setting up a lathe, programming a computer or selling, are probably things that can’t be protected.

On the other hand, specific business secrets that are not generally known and give a company a competitive advantage may be protectable.

A mechanism needs to exist to enforce those rights. In most states, the theft of trade secrets gives you the right to go to court. But the same situation may be covered by other legal theories. If material has been copied, for example, it may be a copyright infringement. And there may be contractual rights, other intellectual property rights or other theories involved.

What about loyalty between employer and employee?
It may be that the employee ethically owes it not to take trade secrets and stab the employer in the back. Perhaps the employee had to sign an employment or non-compete agreement at the time of hire. Or he’s at least taken a paycheck and legally must follow a policy manual that forbids removing confidential information. Employment lawyers are very familiar with employee loyalty disputes.

A company also needs to make sure it maximizes protection of intellectual property from the beginning: trade secrets that are protectable are protected. If it’s not treated as a secret, then it’s hard to say someone took a secret. But by protecting it, you are acknowledging that it’s a secret.

You can protect other forms of intellectual property by registering copyrights and trademarks, and applying for patents.

Is protection a legal or security issue?
Legal protection depends on the nature of the subject. If your secrets are all on a computer, are passwords changed regularly? Does someone monitor the passwords? Is there a limitation on the number of copies that someone can make? All of these are security issues.

A thumb-drive security device or physical locks can prohibit unauthorized people from getting into the network. Thorough personnel and IT policies can provide pretty high security and be evidence that you’re treating the information as secret.

At the opposite end of the spectrum, sloppy employee practices can make it harder to prove secrecy. For instance, if an employee types in a password while someone is looking over his shoulder, and then the entire database is illegally downloaded, that’s not an employee issue but it’s definitely a trade secret issue.

How can intellectual property be protected?
If information is in a tangible medium such as a database, list, blueprint, drawing, plan, spreadsheet or text, you can copyright it.

Here’s a good example of illegal infringement. An office sub lessee steals some blueprints from the lessee, our client. The sub lessee later declares bankruptcy and claims ownership of the blueprints. We present our copyright certificate and reclaim the blueprints.

If you send your property to the Library of Congress to be copyrighted, you may give up secrecy unless you follow the right procedures. But you can withhold 49 percent of the material and still get copyright registration and preserve your secrecy if you follow proper procedures.

DAVID BREZINA is a partner at Barnes & Thornburg LLP. Reach him at (312) 214-4802 or dbrezina@btlaw.com.