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What are some common missteps that can weaken a company's ability to protect trade secrets and business relationships, and what can be done to avoid them?
Even with a highly detailed complaint or compelling Temporary Restraining Order brief, sometimes it can be difficult to overcome mistakes made months – or even years – before litigation begins. Here are four proactive steps your company can take now to strengthen its position should litigation become necessary to protect trade secrets and business relationships:
First, know that some courts decline to enforce otherwise well-drafted, narrowly tailored restrictive covenant agreements because of errors in how they're administered and managed. When providing agreements to employees, be sure to comply with any requirements for advanced notice, required review periods, and special consideration requirements because all can vary widely by state. Also, consider existing restrictive covenants if providing a separating employee with a severance agreement.
Second, because time is of the essence in these cases, avoid wasting time tracking down agreements. Keep records of exactly what agreements each employee has signed and where they are located. And, if employees sign digitally, keep an admissible record of the electronic signature trail with the agreement.
Third, take reasonable steps to safeguard trade secrets and maintain evidence of these steps. Mark confidential information "Confidential" and limit access to those with a "need to know" based on job responsibilities. Require complex passwords to protect and monitor access to critical systems and databases. Keep hard copy documents under lock and key and restrict your office access. Restrict an employee's ability to download confidential information to third party cloud accounts or external storage devices. And develop policies on these safeguards, training employees on them, and keeping records of the training.
Finally, establish a process for handling the inevitable resignation of a key employee who may pose a competitive threat. Consider an exit interview and an attestation that all company information was returned. Do not immediately wipe and recirculate their laptop; instead, preserve email and devices for possible forensic analysis. Evidence of impermissible solicitation may be gained from monitoring the employee's company email after their departure, as clients often mistakenly send e-mails intended for the new employer to the employee's old email address.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
