Common Ways Businesses Leak Trade Secrets Without Their Knowledge

bookkeeping-online-sofware-computer-tablet-phoneIf you have a business, you have trade secrets. It is really that simple. In Texas, any information can be a trade secret as long as (1) it has economic value because it is not generally known and (2) the owner of the information has used reasonable efforts to keep it secret. Customer lists, pricing and discounts, manufacturing designs, financial data, food recipes – are all common examples of trade secrets.  However, virtually any information that meets the above two criteria can be classified as a trade secret in Texas.

When a trade secret information is stolen by a competitor or a former employee, the owner can seek injunctive and monetary compensation in court.  To get that, however, he will have to show that the information that was stolen is, indeed, a trade secret, i.e. that it has economic value and that he has used reasonable efforts to keep it secret. Unfortunately, many business owners do not realize what their trade secrets are until they are taken, unwittingly exposing such information to the public and destroying its trade secret status. Here are some common ways that companies are unknowingly sharing their trade secrets causing them to lose protection under the Texas Uniform Trade Secrets Act: 

Company Websites.  Many companies will post their customer lists and customer endorsements or recommendations on their websites to help attract other customers. Some companies also provide their pricing, rebates or discount information on their websites as well. While this may be very useful in attracting new clients, once such information is posted on a website, it loses its trade secret status.

Social Media.  Information shared on social media is not considered to be confidential or secret. Sometimes, companies will share their customer names or even pricing information on social media to attract a wider customer base.  Other times, company employees will share such information on their personal social media.  In either case, putting information out into the public domain means that the owner of the information probably will not be able to pursue a legal claim against anyone who decides to use such information.

Vendor and Third-Party Contracts. Even those companies that have non-disclosure agreements with employees often fail to include such restraints in their contracts with vendors and other third parties, which means that any information shared with such parties may lose its trade secret protection.

Public Filings. Unless filed under seal, any documents filed in court are open to the public, which means anyone can get a copy.  A business that voluntarily files documents containing trade secrets with the court may make the confidential information lose its trade secret status.  For example, filing a client contract in a collections lawsuit without redacting the pricing information will waive the confidential nature of that information.

Conclusion: The first step in avoiding an unwitting disclosure of trade secrets is taking stock of all information that your business has that might be a trade secret and implementing the processes and measures that would be considered reasonable to preserve the confidentiality of such trade secrets. When in doubt, consult with an attorney to conduct an audit of trade secrets at your company and devise the proper protection procedures. 

Leiza litigates non-compete and trade secrets lawsuits on behalf of COMPANIES and EMPLOYEES in a variety of industries, and has advised hundreds of clients regarding non-compete and trade secret issues. If you need assistance with a non-compete or a trade secret misappropriation situation, contact Leiza for a confidential consultation at LDolghih@GodwinLaw.com or (214) 939-4458.

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