As a general proposition, an employee cannot be restrained from using “general techniques” learned on the job, and the employer’s interest in the trade secret must be “crystal clear” to justify monopolizing what may have become part of the employee’s general knowledge and experience. Therefore, in addition to proving that it alone knows and uses the subject information, an employer asserting trade secret status must also establish that it has taken adequate steps to maintain that secrecy. As this article explains, by controlling access to company information through the use of passwords and confidentiality agreements, your company has instituted a belts-and-suspenders approach that will, in all probability, increase the likelihood that a court will agree with you that maintenance of trade secret protection over that information is proper.
In determining whether or not specific business information qualifies for protection as a trade secret, courts often refer to the six-factor test suggested by the Restatement of Torts:
(1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Restatement of Torts § 757, comment b.
The first two factors relate to exclusivity of knowledge, both within a particular industry (factor 1) and within a single business itself (factor 2). Thus, to the extent that the information sought to be protected is generally known by your competitors, and/or is readily accessible by your employees, a finding of trade secret status will not occur.
Within the fireworks display industry it is understood that any competitor can, for a fee, obtain a list of potential customers from a third party, or purchase various trade directories listing, among other things, suppliers and vendors. This type of contact information may also be available in telephone directories and from website search engines (e.g., Google.com, Yahoo.com, AskJeeves.com). For those businesses that identify specific customers on the company website, you may be compromising any right that your business may have to maintain trade secret status over those customers; their identities and affiliation to your business is now a matter of public record. All of these comments are equally applicable to the retail fireworks industry.
Similarly, if client information is readily accessible to each and every employee via the computers located at each employee’s desk, it is unlikely that a claim of trade secret protection will be successful. To overcome this, it is suggested that your business implement the precautionary measure of creating and issuing a password to your employees for purposes of accessing client information or, for that matter, all of the other information that you may want to protect (e.g. price lists, vendor lists). The more you limit and control an employee’s access to information not relevant to that employee’s specific job duties, the greater the likelihood that trade secret status will be found. To summarize, when company information is left unprotected on a centralized computer accessible to all persons in the company sharing the computer, the information is less likely to qualify as a trade secret.
The use of confidentiality agreements is helpful in bolstering the claim that the information disclosed was a protected trade secret. Without such a document, it is easily argued that as an employer you previously had no expectation of confidentiality regarding the information you now seek protection for. By your omission of not having a signed confidentiality agreement you have made the effort to obtain trade secret protection that much harder. Your efforts to seek protection will be deemed to be belated, and made in bad faith in an effort to harass and retaliate against the offending employee or party. In a future article, I will discuss the fine points of creating confidentiality and non-compete agreements.
In conclusion, not all information is, in and of itself, subject to trade secret protection. In fact, when the information can be properly acquired or duplicated by others with relative ease or without incurring great expense, trade secret status is not likely. As a result, it is incumbent upon the employer to identify information subject to trade secret protection, and to implement precautionary measures, such as passwords and confidentiality agreements, regarding self-generated information it considers to be confidential and subject to trade secret protection. The legal maxim ‘equity aids the vigilant, not those who slumber on their rights’ is certainly appropriate in the arena of trade secret protection.
