10 ways to protect your company's trade secrets

Your people are your most important asset. But your trade secrets are up near the top of the list, too.

Just what are trade secrets? They are the information that would damage your company if your competitors got a hold of it. What can steps can you take to protect them?

Here are 10 actions you can take to reduce the risk of trade-secret theft:

1. Keep secrets off your website.
   Common sense suggests that if something is on your corporate website, it can’t possibly be a trade secret. Yet we’ve seen companies try to argue that it is. For example, a company might claim that customer lists are confidential, despite their website trumpeting the names of their customers. If it’s really a secret, keep it that way.


2. Use password protection on your trade secrets.
   If secrets are going to be kept on your company’s computers, make sure your password protections are up to date. Have a strict password policy, and make sure everyone follows it. Once employees start sharing passwords, your secrets are at risk. And make sure employees don't write them down. (See this post about employees who do.)


3. Use a shredding service.
   Many secrets find their way onto paper and end up in employees’ wastebaskets or, even worse, recycling bins. Giving employees personal shredders is an improvement, if everyone uses them. A better solution is to engage a professional shredding service, along with a strict policy for using it.


4. Have a powerful email/internet/computer policy.
   Most trade secrets spend much of their lives in electronic forms, and smart-but-unethical employees can use today’s technologies to help these secrets find their way to your competitors. Have a strict digital policy that carefully spells out that the computers are company property, and that employees have no right or expectation of privacy in what appears on their screens and hard drives.


5. Keep secrets under lock and key.
   It’s basic common sense, but it’s amazing how many employers fail to lock up their trade secrets. If secrets are kept in file cabinets, make sure the drawers are locked when not being used. Install locks on office doors and desk drawers to protect trade secrets kept in employees’ offices. And keep track of who has the keys.


6. Have — and use — a company ID system.
   Larger companies have so many employees that it can be hard to keep track of who’s who. To prevent strangers from snooping around your offices, implement a company identification system. And make sure employees wear or carry their ID badges. A system that isn’t used consistently offers little protection.


7. Have a need-to-know policy.
   Don’t get in the habit of cc-ing everybody in the company. Limit information to people who have an actual need to know it. If trade secrets are distributed throughout the company without regard to who needs the information, then a court might conclude that they’re not really trade secrets.


8. Conduct exit interviews.
   When an employee leaves your company, this might be the last time to impress upon them the need to keep confidential business information confidential. Have a checklist of points to make during the interview, and get the employee's signature on an acknowledgment that it's not OK to distribute secret information. This makes it harder to feign ignorance after being caught distributing your secrets.


9. Review trade-secret concerns whenever a key employee is leaving.
   Whenever you find out that a key employee is leaving, you should examine the trade-secrets she was privy to and assess the risks of her disclosing them. Especially if she’s going to work for a competitor. Remind her of any noncompete or nondisclosure she’s bound by. And preserve the contents of her computer hard drive and email, just in case. (Don't just reassign her computer to her replacement!)


10. Have a trade-secret audit done.
    Your employment counsel should be able to provide you with a comprehensive review of your trade-secret inventory, procedures, and policies for a reasonable fixed fee. The end product of this audit should be an executive-level report that tracks your company’s trade secrets, including who knows what and what protections are being undertaken to safeguard them. If you don’t know whether your trade secrets are being protected, they probably aren’t. A trade-secret audit should pay for itself many times over in reducing both trade-secret theft and unsuccessful enforcement litigation.