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COVID-19’s next wave of implications: 10 best practices for protecting trade secrets 

April 16, 2020

As COVID-19 has impacted each of our daily lives and each business begins navigating its workforce now working remotely, it is important to remember the challenges working from home can present with respect to protecting trade secrets. These are challenging times, and in addition to considering the specific 10 recommendations below, employers should remember the importance of regularly checking in with employees. This will help avoid employees feeling isolated or neglected, which could lower morale or loyalty, causing employees to let their guards down or actively engage in misappropriation.

What are trade secrets?

Generally speaking, trade secrets are secret processes, practices or information that give a company an economic advantage over its competitors. [1] Trade secrets can include things like customer lists, customer contact information, customer preferences, formulas or other internal business records. In general, trade secrets are protectable if they are not known to the public or competitors, would have some economic value to a competitor, and if the business has taken reasonable steps to maintain its secrecy.

Why focus on this issue now?

Over 300 million Americans are now “sheltering in place,” and this shift to working from home can put a business’s trade secrets at an increased risk of misappropriation. Remote work can also put a business’s trade secrets at risk of losing status as a trade secret. In either instance, your business could be severely impacted in the future, based upon decisions being made today.

In these times, as employees move to remote work, it is more important than ever for businesses to protect their trade secrets. As employees access company information on home computers and personal devices and discuss company-specific records and information in locations that are not usually utilized for work, an environment has been created that is ripe for intentional misappropriation. Additionally, if business’s efforts to maintain secrecy are ignored, lose emphasis or are no longer enforced, the business may lose the protections afforded by trade secret statutes, even if unintentional. It is also possible that without taking some specific steps, the business may fail to discover the disclosure, misappropriation or misuse of its trade secrets until months later when the damage has already been done.

Even though many employees have been working remotely for some time, with the vast majority of the U.S. workforce now doing so, it is more important than ever to emphasize the practices and policies already in place to protect them.

Recommendations for next steps

Because each business will require different steps and procedures, the following list of recommendations for consideration is neither exhaustive nor applicable to every situation:

  1. Emphasize current policies and agreements with your employees by reminding them of their obligations pursuant to any company policies, handbooks and/or employment agreements. You may want to consider sending specific notices for employees to acknowledge their obligations to the company and that they apply while working remotely.
  2. Provide training to employees regarding company information and the obligations to maintain its secrecy when working remotely or using a personal device.
  3. Implement new (or update existing) agreements or policies related to employees using personal devices for remote work purposes including, but not limited to: 1) reminding employees of company monitoring of their devices; 2) informing employees that information that may be stored on their personal device remains company property; 3) informing employees that their device is subject to review for company information should the employee resign or leave employment; and 4) informing employees that any company information on any personal device after employment ends is to be deleted immediately upon the end of employment.
  4. Where remote access has already been permitted, consider conditioning continued access on electronic signature.
  5. Continue to limit access to company trade secrets to those employees that “need to know.”
  6. Survey employees to determine what devices they are using to access company trade secrets.
  7. Ensure you have policies to help prevent the employee from misappropriating company trade secrets if an employee is laid off or terminated whenever possible and, further, to delete or wipe your trade secrets from any personal devices the employee might have utilized during their employment.
  8. Work with counsel to develop procedures for ending employment for remote workers, including policies related to the recovery of company information and to ensure the information does not remain in the former employees’ possession.
  9. Instruct employees not to print or copy materials while working remotely. When this is necessary or unavoidable, direct workers to safeguard any printed or copied materials in some secure space at the remote-work location until the employee can return those copies to their place of work or shred remotely.
  10. Review agreements with vendors who host or facilitate access to companies’ proprietary or trade secret information and revising relationships with those entities to ensure they are taking steps to safeguard access to companies’ trade secrets or proprietary information.

Again, though this list is not exhaustive, nor applicable or possible for every business, protection of your trade secrets should remain of paramount importance during this challenging period. By making intentional decisions regarding the protection of your trade secrets, you can increase the likelihood that you will successfully protect them.

Please do not hesitate to contact your primary Greensfelder contact or a member of Greensfelder’s Restrictive Covenant & Trade Secrets group with questions about the issues raised in this article.

Link to COVID-19 Resources page

[1] Compare 18 U.S.C. §§ 1836, 1839, Defend Trade Secrets Act “trade secret is defined as: “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.”

with Unif. Trade Secrets Act § 1 (Unif. Law Comm’n, amended 1985) “The USTA defines a ‘trade secret’ as: "information, including a formula, pattern, compilation, program, device, method, technique, or process that: (A)Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (B) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

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