Trade Secrets: Three Ways you May be Unwittingly Sharing Yours.

Trade secrets come in many forms.  They commonly include customer lists, programming data, pricing information, cost matrices and secret recipes.   Whatever information a company develops or acquires for the purpose of having a competitive edge that it does not share with others can usually be shoe-horned into the definition of “Trade Secret.”

The Achilles’ heel of trade secrets” is keeping that information a secret.    Locked doors, computer passwords, employment agreements, and other devices are used to secure and maintain the secrecy of certain information.  Despite having these systems or agreements in place, there are a several ways in which companies and individuals reveal their trade secrets to the world.  And by revealing this information, it may no longer be considered a secret.  This blog discusses three common ways that companies or individuals, sometimes unwittingly, share their trade secrets.

Company Web Pages & Social Media 

Most companies and individuals have an internet presence.  Web pages and social media can be a great advertising tool.   In litigation, however, these tools can become a great source of information for your adversary.   Web pages and cites that are not password protected are open to the public.   Information that is placed on those pages becomes public information and is no longer considered to be confidential or secret information.  It is not uncommon to see the following types of information on a company web page:  (a) customer names; (b) vendor names; (c) pricing; and (d) contract terms and conditions.   If your company has this information on its web page, it will be difficult–if not impossible–to enjoin someone from using that information under a trade secret theory of liability. If you want to keep something secret, do not post it on your web page or social media account.

Lack of Non-Disclosure Agreements  

If you plan on sharing trade secrets or confidential information with vendors, other individuals, or companies outside of your own employees, then it is best to have a written non-disclosure agreement in place.   Voluntarily providing pricing information, formulas or other information to others outside of your company can result in waiver of that information’s confidential or trade secret status.

In non-compete litigation, for example, the lack of non-disclosure agreements with other entities commonly comes up when trying to enjoin a former employee from using trade secrets. By contacting a customer identified on the company’s web page, the former employee’s counsel could simply call up the customer and if there was not a non-disclosure in place, could learn the pricing, terms and other information that the company freely gave to the customer.   With enough customers contacted, it could become very hard for the company to establish the secret nature of the information it claims is a trade secret.  If you intend to keep pricing, terms or other information that you commonly share with your customers a secret, better obtain a non-disclosure before sending bids or offers.

Judicial Pleadings   

In the United States, courts operate with a high level of transparency.   This transparency is a great asset of the justice system.   As such, unless a pleading is filed under a protective order or some other instrument or applicable statute that preserves the confidential nature of the information contained in filed documents, documents filed in state and federal courts are considered to be public records.

Public records are not confidential. If you voluntarily file your confidential trade secrets with the court, then (with some statutory exceptions related to social security information and other personal information) you have waived the confidential nature of the information contained in the filed documents.   When enforcing your trade secrets or confidential information in court, be sure to have legal counsel address with you how to properly protect the confidential nature of your information while still obtaining the relief you seek.

Conclusion

Creating or obtaining trade secrets can be time consuming and costly.   The rewards for building the better mouse trap, however, are worth the cost.  Do not go through all the trouble of creating a competitive advantage then give that highly valuable information away.   Keep confidential information off of your web sites and social media.  Sign non-disclosure agreements with outside vendors and clients.   Avoid filing trade secrets in an unprotected manner in court.   Avoiding these common missteps could help maintain the secrecy of your confidential trade secrets.