Nobody expects it — until it’s too late

By Kurt Leyendecker via cobizmag.com   Article

Why a trade secret is the Spanish Inquisition of intellectual property

“People with at least passing familiarity with the term ‘intellectual property’ can associate it with patents, trademarks and copyrights. But ‘trade secret’ doesn’t often come to mind. Simply put, a trade secret is the Spanish Inquisition of intellectual property: Nobody expects it until it is too late.

Perhaps you and some colleagues left your jobs to start a business competing with your former employer. You figure that with reduced overhead, long hours, hard work and a little luck, you can provide the same product or service at a higher quality and for greater value. You and your business partners form an LLC, rent office space and advertise. You call some of the suppliers you used at your previous job, and you call upon some of your former customers to see if they are interested in switching.

You and your partners invest your life savings into making this new venture a go. But one day there is a knock on the office door, and a process server hands you a complaint and summons. You are being sued for misappropriation of trade secrets. …

Protecting sensitive information isn’t particularly difficult and can be as easy as marking documents and electronic files as confidential and storing the information in password-protected files only accessible by personnel with a bona fide need to know the information. …

Misappropriation of trade secrets is a common litigation claim seen in lawsuits between companies and former employees. The question of whether sensitive information was sufficiently protected and guarded to qualify as a trade secret is very fact specific; information that wasn’t marked and systematically segregated is subject to great uncertainty in front of a court. Tens of thousands of dollars can be spent just determining whether a company has trade secrets before even getting to the question of whether the information was misappropriated.”

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