The Final Four . . . Categories of People That Threaten Your Trade Secrets


Since everyone is focused on filling out brackets to identify the final four, let’s also take a look at ¬†four important categories of people who threaten trade secrets: Employees, customers, vendors, and visitors.

Employees: No group poses a greater threat to trade secrets than employees. Virtually all companies with employees must share some proprietary information with them. And many of these employees will eventually work for a competitor. Thus, an employer can never be too vigilant about protecting itself from accidental—or worse, intentional—disclosure of trade secrets by its employees.

The best way to limit this risk is to have all employees with access to proprietary information sign a noncompete agreement that contains nondisclosure obligations as well. At a minimum, all of these employees should sign a nondisclosure agreement. Also, proprietary information should only be shared with employees who need that information to perform their jobs. And it is critical to educate employees about their trade-secret obligations.

In future posts, I will be talking frequently about how to best deal with employees.

Customers: While customers are obviously the lifeblood of any company, they present hidden risks for disclosure of trade secrets or proprietary information. Take pricing information in an industry where prices are not widely known, for example. (In certain circumstances, pricing information can be a trade secret. At a minimum, pricing information is valuable in a competitor’s hands.) Customers could tell competitors about pricing in an attempt to negotiate a better deal. This problem can be addressed with confidentiality provisions in customer contracts.

Vendors: Companies often provide their vendors with confidential information. Like with customers, the risk here can be minimized with confidentiality language in vendor contracts.

Visitors: By visitors, I mean not only actual visitors to a company’s physical location, but anyone who can access the company’s information in person or remotely. For example, anyone who can access a company’s website is a visitor. To keep visitors from accessing proprietary information, implement a formal visitation policy, including making all in-person visitors sign in and be accompanied by a staff member at all times. And make sure to work with an IT professional to ensure that online visitors cannot access confidential information.

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