COVID-19 and Trade Secrets

Last week I wrote about a number of ongoing COVID-19 issues for employers to consider.  The issue of trade secrets in the current environment is also worth considering.  I would wager that in my twenty plus years of practicing employment law, there has never been a time when employers’ trade secrets are less secure than they are right now.  Everyone was caught off guard by the pandemic and businesses had to react to maintain operations, often by allowing telework on an unprecedented level.  A great many electronic documents with proprietary and trade secret information went home with employees and are now residing on home computers and laptops.  This includes documents like customer lists, price lists, technical specifications, contracts, business plans, projections and countless others. 

An issue that comes up in most every trade secret case is what steps the business seeking to protect its trade secrets took to maintain secrecy.  Allowing employees to take trade secrets out of the work place or company computer systems may impede future enforcement actions if left unaddressed.  It is worth considering how best to address these issues now and when normal operations resume.  The following list is by no means exhaustive but is a starting point to consider.

Assess the situation.  Businesses should take steps to determine the current status of their trade secrets and proprietary information.  For example, many business have secure remote access systems but employees may bypass them by removing documents via email or download.  IT professionals should be able to assess if this is happening.  In less secure environments, it is still worth examining employees’ use of remote access and considering what documents are most likely to be accessed in the normal course of business.  If any unusual patterns are discovered, employers should take appropriate steps to investigate.   Also, if limitations on access are not in place, consider taking steps to ensure that documents are only accessed by employees with a legitimate need and consider whether additional protections are feasible, e.g. password protections on individual documents.

Remind employees of their obligations.  Employees should be reminded of their obligations to protect confidential and trade secret information and given guidelines for handling such information.  These communications should be in writing and acknowledged by employees.  Employers may also consider pop up windows with acknowledgements of company policies relating to trade secrets on sign in to their remote environments. 

Reset expectations.  When businesses are ready to return to normal operations, they should reset employee expectations regarding remote access to confidential information, curtailing it from current levels in most cases.  Employers may want to institute a process of acknowledgements by employees who accessed remote environments that they have deleted all confidential information from personal computers and devices.  IT assistance could be offered for employees with technical questions about how to comply with any directives.

Update policies and procedures.  This is a good time to take a broad look at policies and procedures and update as necessary.  This includes reviewing confidentiality and noncompete agreements as well as security measures.  Also, it is unfortunate but true that many businesses will not bring back all of their furloughed employees or may need to reduce staff going forward.  As a result, employers should update off-boarding policies and procedures with an eye toward protecting trade secrets and confidential information.  Finally, employers should not forget about vendor and independent contractor agreements as they consider these issues.

Obviously, every business is different and trade secret protection plans vary from business to business.  Please contact any member of our Labor & Employment Group for further assistance.

KMK Law articles and blog posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. The laws/regulations and interpretations thereof are evolving and subject to change. Although we will attempt to update articles/blog posts for material changes, the article/post may not reflect changes in laws/regulations or guidance issued after the date the article/post was published. Please consult with counsel of your choice regarding any specific questions you may have.


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