Companies spend a lot of time and money creating information that allows them to have a profitable business. This information can take a variety of forms such as pricing formulas, business plans, customer lists, product specifications, and more. It can be hard for an employer to protect these types of trade secrets from being used or shared by an employee after they are no longer working for the company.
Like many other states, California has adopted the UTSA, or Uniform Trade Secrets Act. Under this act, if a company takes adequate measures to protect their trade secrets, and if steps are made to keep this valuable information a secret, the California Courts will protect this information.
What is Protected Under the UTSA?
The protection provided to trade secrets by the UTSA is not limited to just recorded versions of this valuable information. The protection goes far beyond electronic data and documents. In California, employers are not required to establish that a former employee took physical trade secret information. Instead, the UTSA will also protect trade secrets that are a part of the former employer’s memory. Because of this, it must simply be shown that the employee disclosed or used their memory rin disseminating this valuable, protected information.
Protecting Trade Secrets
Although trade secrets are protected under California Laws and the UTSA, it is important for an employer to take steps to minimize the loss of this valuable information. Measures taken by an employer to protect the loss of trade secrets should include the following:
Have employees sign a confidentiality agreement when they are hired. This agreement should state clearly that the employee will have access to the trade secrets of the company and that those trade secrets are not to be shared with anyone while the employer is still working for the company as well as when their employment ends. If possible, specific items should be listed as trade secrets as part of the agreement and may include items such as pricing information, customer lists, and business strategies.
Update the confidentiality agreement annually. Update the original agreement each year and be sure to add any new areas of information that may need to be included. Have the employee sign the new agreement each year.
Use detailed policies. A company should have detailed policies regarding the use of the internet, electronic storage devices, and the email system of the company.
Secure the networks. Limit employee access to networks by using multi-character passwords, firewalls, and other means to protect and limit access. Be sure to track employee activity throughout the network.
Conduct an exit interview. When an employee leaves, try to have an exit interview and remind him or her of any confidentiality agreements signed. Attempt to get a signed confirmation from the employee that he or she remembers receiving the confidentiality agreement and agreed to it even after the employment has ended.
Contact an Experienced California Business Law Attorney Today
The easiest way to avoid expensive litigation against a former employee is to protect the information from the moment the employee is hired. The attorneys at Verhagen Bennett LLP can help you create the documentation to ensure your trade secrets are protected and protect your rights if an employee violates the agreement. Contact us today to schedule a consultation.
© 2019 Verhagen Bennett LLP — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.