A few days ago, in a federal court in Chicago gave a manufacturer some tough love about trade secret law. In the case, the long time president of a the plaintiff left to start a competing business and took a flash drive with him that included information about his former company’s pricing, customers, and suppliers. The former president later hired another former employee to join him, and she too brought with her information from her former employer. Some of this information was used “as a general reference point and a benchmark when determining” the new company’s needs and some of it was shared with the new company’s sales representatives, who were “instructed” to “target key” distributors of the plaintiff.
Sounds like a compelling trade secret claim for misappropriation likely to receive injunctive relief?
NOPE!
The judge found that plaintiff had taken “almost no measures to safeguard the information that it now maintains was invaluable to its competitors.” In fact, the judge found that plaintiff’s data security “was so lacking that it is difficult to identify the most significant shortcoming.”
According to the judge: plaintiff could have, but did not do the following:
enter into non-disclosure and confidentiality agreements with employees;
enact a policy regarding the confidentiality of business information “beyond a vague, generalized admonition about not discussing [plaintiffs] business outside of work”;
train “employees as to their obligation to keep certain categories of information confidential”;
ask departing employees whether they possessed any confidential company information, and if they do, instructing them to return or delete it;
adequately train plaintiff’s IT manager about data security practices;
restrict access to sensitive information on a need-to-know basis; and
as appropriate, label documents “proprietary” or “confidential.”
Bottom Line – If you want a to keep something a trade secret you had better take steps to ensure it remains secret!
