California Employment Lawyer

Metropolitan Corporate Counsel has an interview with Alan Gutterman regarding how to implement a trade secret protection program.  Gutterman recites some of the common elements to such a program:

[A]doption of security measures to mark trade secrets, thus, identifying what is or is not considered to be confidential. The programs also include segregation of trade secret information and limitation of access to the trade secret owner or other authorized personnel. I also recommend that a program places employees on notice that the company maintains confidentiality of its trade secret information and that each employee has a duty to assist in protecting such items.

It’s also important to develop a system to prevent inadvertent disclosure of the trade secrets to the public (such as through advertising or other publications). And, the program should strictly control the legitimate disclosure of trade secret information to third parties so that recipients are obligated to protect any information which they might receive, not disclosing or using it in any unauthorized manner.

Gutterman also discusses implementation: recommending that one person or a small committee bear primary responsibility for implementing and supervising the program. Committee members should possess knowledge of the company’s technology.  Gutterman recommends the following steps to launch and maintain an effective trade secret protection program:

(a) Conduct an investigation and legal compliance review covering the company’s intellectual property rights, including its trade secrets and other confidential information;

(b) Based on the results of the compliance review, develop a set of recommendations which can be incorporated into a draft of the program;

(c) Circulate the draft security program to the directors, officers, and key employees of the company, as well as persons who may have responsibility for handling confidential data and information;

(d) Prepare drafts of model documents and contracts necessary for effective trade secret protection, including confidentiality agreements, employee confidentiality and innovations assignment agreements, noncompetition agreements, and provisions for use in license agreements and other standard contracts;

(e) Obtain comments on all draft documents and prepare final versions for inclusion in employee handbooks, etc;

(f) Obtain authorization from the board of directors to implement necessary physical security measures, including labeling and storage of trade secrets;

(g) Conduct one or more training seminars for employees regarding trade secrets and the program;

(h) If necessary, obtain executed employee confidentiality agreements from all employees; and

(i) Establish a schedule for periodic review of the protection program, including reports by the administrators of the program to senior management and board of directors.

By CHARLES H. JUNG