Protecting Your Company Assets
Can You keep A Secret?
By Alan M. Insul, Esq.
How many times have you been told “relax, you can trust me”? And how many more times do you actually find yourself handing over valuable company information to a consultant, key employee, or other third party without so much as taking his library card to prove you gave them your crown jewels? Well, for what it is worth, I too may have been a little too trusting when acting as CEO of various companies. Feeling a little less silly now that you know you are not alone? Of course, the real question is how do you protect your company assets.
A company secret can range from customer lists and marketing plans to prototype computer programs and inventions. Depending upon the type of secret protected you may have to disclose this information to people either inside the company or third parties such as distributors. Ultimately you must place some level of trust in those needing access to company secrets. However, it is important that you implement a security system to control the dissemination and use of the secrets. When dealing with employees consider the following:
- Access should be strictly limited to only those needing to know. You may even need to put information in a physically restricted area that require sign in and sign out procedures.
- Any computer terminal access should likewise be restricted based upon password access and perhaps segregated terminals.
- Control or eliminate any copying of the trade secret material and make sure that all paper is shredded rather than simply put into the circular file.
- All confidential material should be conspicuously marked as such on each page. Instruct employees as part of their employment manual and with posted signs not to leave confidential material unattended.
- Designate a person to review all press releases, speeches, corporate information such as brochures, financial statements, etc. to prevent inadvertent dissemination. Also calendar a periodic review of all these procedures to make necessary adjustments.
Trade secrets protection also must uniformly extend beyond your controlled environment. This includes your consultants working with your proprietary information. Even when dealing with third parties, it is useful to make sure that they have instituted the security program with respect to their employees. Another useful tool is the non-disclosure agreement (NDA). I suggest that you have a standard NDA for use with employees as well as outside consultants. This type of agreement sets out the manner in which the information is to be protected, the fact that you expect the information to be protected even beyond the time when the other person has stopped working with your company. It also can serve as a basis to assure you that the outsider will not subsequently compete with you by altering your trade secrets and passing them off as their own.
In a subsequent article, I will cover some of the legal rights you may assert when an employee or third party misappropriates your properly protected trade secrets. However, you have a number of tools that you can immediately utilize to start protecting your trade secrets. Remember if the asset enhances your company’s competitive edge do not risk loosing your advantage by simply asking that employee or outside consultant “Can you keep a secret?” …at least that this lawyer thinks.
