Economists, politicians, and pundits are debating whether
our economy is in recession. Regardless
of the business climate, prudent businesses should regularly take stock of
their assets and develop a plan to protect those assets in good times as well
as bad. Any such inventory and plan
should include a company’s intellectual property along with its machinery,
equipment, and other hard assets.
Intellectual property is not limited to patents, trademarks,
and copyrights. The term also includes trade
secrets, which includes confidential information, such as customer lists and a company’s
know-how. Such information is portable
and can easily be carried out of a company by employees and officers who leave
to work for a competitor. Employers must be as aggressive
in protecting trade secrets as with any intellectual property. Most significantly, an employer must take
precautions to actually keep the trade secret a secret. Employment agreements with confidentiality
and non-competition provisions can be used as tools to protect a company’s trade
secrets and other confidential information. It is not enough, however, to draft an agreement. The company must take affirmative steps to maintain
the secrecy of the information at all times.
Additional
steps employers should consider for protection of their confidential information
include:
- advising
employees of the existence of a trade secret;
- limiting access to a trade secret on a “need to
know basis;”
- creating a formal written policy that restricts
the use or the dissemination of the confidential information;
- keeping track of all employees and third persons to whom the
information is being disseminated;
- requiring the return of the confidential
information that the employer seeks to protect upon completion of use;
- putting the employee on alert that the information
he receives or obtains while in the employ of the employer should be held in
his confidence and not be used for his own financial gain in the event his
employment with the employer ends;
- and prevent the information from being placed in the public domain or rendered readily
ascertainable.
All of these steps can be
provided for through the means of a confidentiality agreement, nondisclosure
agreement or other forms of employment agreements.
Evidence
of diligently protecting trade secrets can pay huge dividends in
litigation. In a recent decision out of
the state of Texas
,
a jury awarded a plaintiff $18 million in damages after finding that defendant misappropriated
trade secret information.1 The award represented the total amount
of time-cost savings that the defendant received from having access to
technology misappropriated from the plaintiff. In another recent decision, a company which created a system to gather
and store data for oil and gas exploration and production entities sued to enjoin the defendant from further divulging information
from its database to other parties.2 The court granted summary judgment in favor
of the plaintiffs finding that the defendant used the plaintiffs’ confidential
data and attempted to sell the data for defendant’s own gain. Though no monetary damages were awarded, the
plaintiffs gained the assurance that its profitable database, which it expended
substantial resources to create, would be protected from misappropriation by
competing companies. Both of these plaintiffs were able to recover because they
took precautions calculated to preserve the secrecy
of their confidential information and to reserve to themselves any economic or
other benefit from their confidential information and prevent its use by
others.
Inventions, processes, and software can and should be
protected by patents and copyrights. Trademarks
can and should be registered and enforced. Trade secrets, confidential information, and customer relationships can
and should be protected by procedures that maintain the secrecy of the confidential
information. Liskow & Lewis lawyers
have experience in drafting agreements, in recommending procedures for
maintaining secrecy, and in prosecuting and defending law suits involving trade
secret and employment agreements and policies.
For more information about the protection of your
intellectual property, please contact George Denegre, Jr. (gdenegre@liskow.com), Dana M. Douglas (dmdouglas@liskow.com) and Thomas J. McGoey II (tjmcgoey@liskow.com) in our New
Orleans office or Hayden Burns (hburns@liskow.com)
and Andy Wooley (awooley@liskow.com) in our Houston office.
