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Stop resigning employees from disclosing trade secrets

On Behalf of | Jun 12, 2023 | Business Law |

Thanks to technological advancements, we can now quickly and easily share knowledge. However, this convenience has made it easier for employees to access confidential data from work computers and transfer it to their personal devices. Your small business could suffer if an employee steals trade secrets and joins a competitor.

What is a trade secret?

The Massachusetts Trade Secrets Act (MUTSA) defines a trade secret as any information, tangible or intangible, that provides an economic advantage by not being generally known or readily ascertainable. Examples of trade secrets include proprietary information about a business or its products that are not available to the public such as formulas, recipes, programs, patterns or processes.

Generally, if the information is something that other people can learn by being in the industry, it is not a trade secret. A customer list, for instance, may be readily ascertainable and not qualify as a trade secret if the contact information can be found online.

Filing a trade secret misappropriation claim

Misappropriation occurs when an employee obtains the secret by illegal and unethical means, such as violating their confidentiality agreement, and then discloses it to a third party who should not have access to it.

However, it can be costly, especially for a startup, to sue an individual or company for trade secret misappropriation. Employers should take preventive measures to safeguard trade secrets before there is any risk of misappropriation.

Preserving trade secrets when offboarding employees

Inappropriate disclosure of trade secrets is most likely to occur when an employee is transitioning to a new workplace. There are two simple ways to mitigate this risk when offboarding an employee:

The first is to remind the employee about the confidentiality agreement they signed during the leave interview or upon resignation. While it may not completely deter the employee from revealing your secrets, the threat of legal action should make them think twice.

The second is to retrieve all company equipment immediately. Specify a timeframe by which they must return the equipment and remove the employee’s access to company devices and databases to reduce the risk of data theft.

Taking preventative measures to safeguard your business’s most valuable assets is an excellent way to accelerate growth and maintain a competitive edge. If you need advice on what methods you should be using, a business attorney may be a good resource to tap into.