The information disclosed herein is proprietary with XYZ Company and shall not be duplicated, used or disclosed, nor shall the articles or subject matter contained herein be reproduced, without written permission of XYZ Company.
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A notice similar to the one above has been used on drawings provided to a vendor. It should be noted that if the evidence establishes that a document was otherwise treated as a confidential document, the failure to apply a proprietary legend will not prevent a court from finding that a document is entitled to protection as a confidential document. On the other hand, it should also be noted that if your company does establish a policy of stamping confidential documents with a restrictive legend, the failure to follow this policy may be interpreted as a lack of intention to protect a trade secret.
Confidential documents which must be submitted to the government for any reason should be marked to ensure that they are not inadvertently released to others under the Freedom of Information Act. There are specific exemptions under the Act for trade secret information, and the document marking should specifically refer to the exemption. For example: "Subject to exemption b 4 of 5 U. Confidential documents should never be left in open view or unattended even when they are in use. Any new product designs should be kept in a locked drawer or cabinet, and the design area should be locked at night.
Similarly, secret processes and formulas should be kept under lock and key. Courts are impressed by such precautions as a locked box for blueprints and locking the area where the documents are kept at night. No copies of confidential documents should be made without authorization from an appropriate member of management.
All copies should be treated with the same care for confidentiality as the originals. When multiple copies of a confidential document must be distributed, the whereabouts of each numbered copy should be tracked in a log book. Another common investigative technique is rifling through garbage bags. In each area where confidential documents are located, an individual should have responsibility for marking them properly, keeping them under lock and key, monitoring their removal and return to locked files, not releasing them without authorization, overseeing copies, maintaining the log book of numbered copies of each document, and disposing of them properly.
This individual should know to advise the security officer when a departing employee is the possessor of any confidential information, so that the security officer may be certain all such documents are surrendered upon the employee's leaving the company. The security officer should monitor the practices of each such individual periodically, discussing problems with and reminding him or her of procedures to be followed.
Documents containing technical information prepared for outside release should be screened before release to ensure that they do not disclose trade secrets of the business. These documents include advertisements, sales brochures, hand-outs for trade shows, newspaper press releases, articles to be submitted to technical or trade journals, and training and maintenance manuals intended for unrestricted release to customers.
The company may receive an inquiry for information about a product so that the inquirer may determine whether the product will meet the inquirer's requirements. For example, a customer may want to know whether a trade secret formulation contains a particular ingredient in order to avoid possible adverse reaction with materials to be added by the customer. To accommodate such requests, the business may be able to release censored drawings or descriptions insufficient to reveal any trade secrets involved.
A system should be established to track and retrieve all confidential documents which have been provided to outsiders for any reason. Even when documents disclosing trade secrets are released to outsiders with the appropriate restrictions, protection may be lost by the failure of the trade secret owner to recover such documents after the purpose for which they were supplied had been accomplished. Therefore, an adequate system to track and retrieve documents is important.
Even without a written agreement, Florida courts will generally enforce an obligation of confidence binding an employee or ex-employee not to disclose or use the trade secrets of his employer. However, there are several reasons for requiring a new employee whose duties will involve access to trade secrets to sign a written agreement at the time of hiring. A written agreement may be necessary to enable the ex-employer to obtain relief against a departing employee who was the originator of trade secrets which the employee is taking to his or her new employer, where the ex-employee's duties had not specifically required him to devise new products or techniques.
The fact that an employee signed a secrecy agreement puts the employee on notice that trade secrets are involved. Further, an acknowledgment by the employee that the trade secrets are not previously known may go far to undermine any later defense that such subject matter was not secret. Long-time employees may take it as a slight to their trustworthiness.
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Another question is whether the agreement is supported by sufficient consideration to consummate a contract. The prevailing view seems to be that continued employment constitutes sufficient consideration for such agreements. For these reasons, some employers choose not to request existing employees to sign an agreement, relying instead on the general obligation of trust and confidence binding an employee with respect to the secrets of his employer even in the absence of a written agreement.
Other employers take an opposite view, regarding confidentiality as being important enough to risk slighting long-term employees, and relying on the continuance of employment to be sufficient consideration for the confidentiality agreement. When obtaining covenants from existing employees, as a matter of precaution additional consideration could be provided, such as the payment of a sum of money, an increase in salary, or a promotion to a higher position.
Depending upon the circumstances of the employment situation, a program could be set up whereby all new employees are required to sign a non-disclosure agreement, and present employees are asked to sign immediately, as well as upon any pay increase or promotion. This provision requires the employee not to disclose the trade secrets of the employer or use them other than for the employer's benefit. A non-disclosure agreement may contain the following sample clause:.
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I [name of employee] agree that I will carefully guard and keep secret all confidential information of [the employer] which I may acquire or learn, and at no time while in the employ of said company or thereafter shall I disclose any such information without first securing the written consent of said company. A second necessary provision requires the employee to promptly disclose and assign to the employer any discoveries, improvements or inventions made by the employee during the course of his employment which relate to the business of the employer.
Absent such provision, the employee may be considered to have an interest in the subject matter at least equal to that of his employer or, in the alternative, it may be considered that the knowledge is part of the employee's skill and experience, rather than a trade secret of the employer. Although moonlighting may be quite common and, in general, unobjectionable to the employer, provision should be made to preclude an employee's moonlighting with a company which would compete with the business of the primary employer.
An employee should be bound not to take steps to organize a competing business prior to leaving the employ of his current employer. A further provision may require an employee, during his employment, not to solicit fellow employees to leave the company to undertake competitive employment.
As an incentive for an employee to comply with the agreement, it might be helpful to include a provision which prohibits the breaching employee from receiving any benefits to which he or she would otherwise be entitled. A non-disclosure and non-use covenant obligates the employee not to disclose or use the employer's trade secrets after termination of the employment, even when such trade secrets were originated by the former employee. In most states, such an agreement, known as a restrictive covenant not to compete, is enforceable. In Florida, the enforceability of such an agreement, which is also commonly referred to as an agreement in restraint of trade or commerce, is determined by one of three statutes.
Section Restrictive covenants or covenants not to compete entered into on or having an effective date after July 1, are governed by Section While a detailed discussion of these three statutes is beyond the scope of this paper, several key aspects of Section The changes to Chapter enacted in generally disfavor agreements in restraint of trade or commerce. To be enforceable under this statute, a restrictive covenant must be in writing and must be signed by the person against whom enforcement is sought.
The party seeking to enforce a restrictive covenant now bears the burden of pleading and proving the existence of one or more "reasonably necessary" "legitimate business interests" that justify the enforcement of the restrictive covenant. The statute contains a non-exhaustive list of several categories of legitimate business interests, which include trade secrets, goodwill and specialized training. The term "legitimate business interest" is best defined as a business asset of any type, that if misappropriated would give the misappropriating party an unfair competitive advantage over the party from whom it was misappropriated.
This statute also establishes that a court shall apply a rebuttable presumption that particular time periods are reasonable and unreasonable. For example, a restrictive covenant predicated upon protection of trade secrets is presumed reasonable if its term is five 5 years or less, and presumed unreasonable, if its term is more than ten 10 years. Finally, Section While few Courts have analyzed Section First, what is a legitimate business interest justifying the restrictive covenant?
And second, what is reasonably necessary, i.
It is important for the business to create a climate of awareness among its employees that they have an obligation to preserve its trade secrets. New employees should have this explained to them at the time of hiring. Posters can be displayed in appropriate areas of the plant, warning employees of their obligation of secrecy.
If there is a house journal, periodic reminders should be published in it. Managers should be instructed to periodically remind employees working under their supervision of their confidentiality obligations. The single most important step in protecting company secrets against a departing employee may be an effective exit interview. The interviewer should do the following: i recover from the employee any materials containing company secrets before he departs; ii retrieve and file the employee's photo I. Further, the interviewer has an opportunity to learn in what new employment the employee will be engaged.
Departing employees should be requested to sign a statement that they have returned all confidential materials and that they acknowledge their continuing confidentiality obligations. If it appears that the employee's new employment is with a competitor in a position likely to involve use of the trade secrets of the former employer, the competitor can be advised of the confidentiality provisions of the employment agreement binding the former employee. Any business which hires vendors to work to specification on parts or formulations that incorporate trade secrets, or which utilizes an outside contractor to build machinery, components, etc.
An oral commitment of the vendor may be enforceable, or such an obligation may be imposed on the basis of the relationship between the parties. However, it is far safer to rely on neither and to set out the commitment in writing. It may be included as a clause in the standard terms and conditions or your company's Purchase Orders or Requests for Quotations. For example, the clause could read:. In order to best protect trade secrets, the vendor's commitment should be set forth in a separate secrecy agreement. Any such agreement should obligate the recipient of any documents containing the trade secrets to return them promptly to the discloser, together with any copies which have been made, after the purpose for which they have been furnished has been accomplished.
One area which is generally not subject to protection is the so-called "reverse engineering" process which may occur upon sale of a design or product to the public. In general, unless protected by patent or copyright, or by a specific contractual agreement such as those discussed herein, anyone is free to copy a design or product which is in the public domain. One limitation occurs when a specific design is widely known as emanating from a specific source such that the design may be said to have acquired "secondary meaning". That is, members of the public are so familiar with the design that they assume the "copy" is the product of the original designer.
Under such circumstances, the design may be subject to the principles of consumer protection law or may be protected by Section 43 a of the Lanham Act as a designation of origin. Generally, litigation requires that proceedings be a matter of public record and may involve the very trade secret itself. This poses special problems of secrecy which are best resolved on a case by case basis, with specific regard to the facts, issues and posture of the client in the case itself.
A detailed discussion of this topic is outside the scope of this paper. However, precautions should generally include an early agreement upon an appropriate protective order, filing evidence and certain testimony under seal, blacking out sensitive material which is not relevant to the proceedings, restricting access to copies of documents and possibly excluding individuals from the presence of depositions or testimony.
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Individuals and businesses should obtain and utilize all available protections of patents, trademarks, copyrights and trade secrets. Obtaining the appropriate registrations and taking adequate security precautions are critical. However, there is no substitute for contractual agreements that restrict the use and disclosure of intellectual property and other confidential and proprietary information.
Agreements such as those are discussed above provide a degree of protection that cannot be obtained from any other source. MercExchange, L. Lott and Mark E.
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