Protect Your Small Business from Trade Secret Misappropriation – Here’s How
With the rise of technology and access to information, the potential for misuse of trade secrets is ever-present. Trade secret misappropriation can occur in any small business and carries serious consequences. Knowing the laws surrounding trade secret protection and how to best protect your intellectual property is critical for any business owner.
First and foremost, it is important to understand that a trade secret need not necessarily consist of complicated engineering or software information; rather, it can be as simple as unique customer information or business strategy. By definition, a trade secret must contain “information not generally known to the public” that has value and industrial/commercial applications that are kept confidential by the owner. Any violation of this confidentiality could constitute an act of misappropriation, regardless of whether or not the original source was listed.
Unlawful acquisition of a company’s trade secrets can come in many forms, such as employees stealing proprietary data before leaving the organization, competitors using unethical means to obtain sensitive information, or even acts of espionage by foreign entities. The damage caused by misappropriation can be significant ranging from lost revenue due to leaked strategies or formulas, damaged reputation, vulnerability to litigation costs and more.
The legalities surrounding trade secrets are varied but all aim to protect companies’ intellectual property rights against theft or misuse. For example, under United States federal law (e.g., Economic Espionage Act) companies may seek both civil damages for violations related to unauthorized disclosure and/or criminal prosecution for individuals involved or associated with those cases. Other countries have similar legislation in place so depending on the jurisdiction, national laws should also be taken into account when determining what level of protection applies in a given situation.
In an effort to prevent violations small businesses should develop policies about use and management of sensitive data; these policies should also address appropriate limitations regarding who has access to said data – including former employees – so that there is no leakage whatsoever from external sources outside the organization’s control As always contracts between parties (employers/employees) should include provisions stating any confidential disclosure agreement regarding ownership rights related to materials created while employed must remain in effect even after termination date. Lastly, if possible, its recommended taking out insurance specifically designed to cover losses due to theft or misuse of company information
At the end of day being proactive in protecting valuable trade secrets is just as important – if not more important – than reacting after it’s too late as proposed measures will deter any attempts at unlawful appropriation by others while avoiding costly legal fees stemming from litigation proceedings down road. Taking necessary steps now will help ensure longevity success your business.