Do You Know Where Your Trade Secrets Are?

Although many might not think so, most businesses have trade secrets. If your employees walk out the door with them when they leave for a new job (or get fired), it can be a big problem.

Hoge Fenton Jones & Appel is a local law firm that holds a popular annual "Employment Law Update" breakfast for area employers. During its recent seminar, attorneys from the firm discussed the many employment law changes on tap for 2011, and what businesses must know to avoid the risk that results from uninformed decisions.

One of the hot topics was how businesses may unwittingly allow their trade secrets to walk right out the door.

The law defines anything that has economic value or gives your business a competitive advantage over a competitor, which you don't want known publicly, as a "trade secret" and could include:

• Sales techniques
• Pricing
• Training programs
• Lesson plans
• Yes, even recipes like Kentucky Fried Chicken® or Coca-Cola Classic®

As long as you're taking reasonable steps to maintain the security of these secrets, your business is legally protected from having anyone steal, disclose or benefit without your permission.

The problem comes if you're getting ready to lay off employees or if they are looking for a new position at a competitor's business or starting a competing business.

If they haven't signed confidentiality agreements and been reminded of those obligations in an exit interview, you could open yourself up to problems.

Protecting Your Trade Secrets

What has your company done to define its trade secrets? What measures has it taken to protect them?

Doing a complete trade secrets inventory and documenting everything, including access rights, confidentiality agreements and job duties, is a crucial first step. Preventing unauthorized access to these trade secrets is equally important. Employees and contractors must understand their confidentiality obligations during employment and after they take a new job.

Read the details in the firm's article, "Trade Secrets Audit" white paper.

(To be clear: I'm not an attorney. Consult legal counsel if you have any questions about the law and how it applies to your business.)

Hoge Fenton will hold a seminar called "Expensive Mistakes to Avoid in Interviewing, Hiring, Reviewing and Firing Personnel" on April 20 in Pleasanton and April 21 in San Jose. Visit its website, www.hogefenton.com, for more information.