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Working From Home And Trade Secrets

Posted: May 28, 2020 at 3:15 pm   /   by   /   comments (0)

Stay at home orders have slowed the rapid spread of COVID-19 while disrupting daily routines. Across the globe, those who can are working from home. Working from home creates considerable risks to workplace confidentiality and trade secrets.

Intellectual property (IP) and its goodwill are valuable assets to businesses. IP such as patents, copyrights, and trademarks require public disclosure of information. Obtaining registrations for these rights provides a business with valuable protections under the law.

Trade secrets are another method of protecting these assets and the associated costs are typically lower. Trade secrets may include a broad variety of proprietary information such as algorithms, computer programs, processes, product specifications (i.e., formulas, recipes), pricing strategies, customer lists, business and marketing plans, and industry forecasts. Protecting this information from competitors gives holders a competitive edge in the marketplace.

Employees working from home have easy access to company information electronically. Employers lose control over an employee’s computer, email, or smart devices which are constantly listening. While an office place may have basic access protocols including employee identification badges and controlled access to work spaces, an employee working from home has any number of people or distractions in their workspace. This presents vulnerabilities and opportunities to disclose business trade secrets.

Trade Secret Legal Protections

In 2016 the United States passed the Defend Trade Secrets Act (DTSA). Under the DTSA, an employer may sue for trade secret misappropriation. Trade secrets require holders to actively protect their valuable information to enjoy protection under the law. To be considered a trade secret:

1) information must not be generally known or readily ascertainable by the public, 

2) must derive economic value from its confidential nature, and 

3) must be the subject of reasonable efforts to maintain secrecy.

During COVID-19, businesses must consider whether they have policies in place to protect trade secrets while employees work from home. Policies currently in place were likely put in place with traditional workplaces in mind. These policies may not work as intended when employees leave their office and work from home. A company must consider if the home office wi-fi is secure, if third parties such as friends and family now have access to the same computers as employees and the opportunity to listen in on business calls. 

Work from home situations require implementation of new trade secret protection strategies. Otherwise, a business’s trade secrets may lose their protected secret status and leave companies vulnerable without any recourse. 

Tips for Trade Secret Protection

The balance between remote business operations and trade secret protection is crucial to a company’s survival in these unprecedented times. Working from home has never before been done on such a wide scale. Here are some tips for maintaining trade secret protection.

Implement confidentiality policies: Under the DTSA, employers must place employees on notice of their obligation to maintain the secrecy of trade secrets. This notice must clearly and specifically notify employees regarding the confidentiality of information. Formal written policies are important along with periodic reminders of this obligation. 

Non-Disclosure Agreements: Employees with access to confidential information and trade secrets should be required to sign non-disclosure agreements when hired. It is also advisable to have employees acknowledge receipt of the company policy before being provided access to any confidential or trade secrets information. 

Training: Train all employees about protection of trade secrets. This includes educating employees on what information is protected and methods for keeping the information secret. 

Labeling: All trade secret information should be clearly designated as a trade secret. Documents may be stamped or contain a cover page reiterating that the information contained is a trade secret. Emails should contain titles or headers notifying the reader that trade secret information is being discussed. 

Transmission: Employers should prohibit employees from transmitting or maintaining company confidential information or trade secrets except through authorized company systems. The use of personal email accounts, cloud services, home assistant devices (e.g., Alexa and Siri), and social media creates additional risk of inadvertent transmission or hacking by third-parties. Employers should require that all confidential business details by using information security and trade secrets must be shared by using a secure document exchange system. 

Logins and Password Access: Periodically change computer and software passwords and prevent use of the most commonly used passwords. Be sure employees are not writing their passwords on notes left near their computer which would allow anyone to log in. Use software that identifies remote downloading of highly confidential or trade secret information. Some situations may require employees to keep a log of when and how they access certain confidential information or trade secrets.

Limiting Access: Place restrictions on which employees can access confidential business information and trade secrets. Password protection to computers and network files is one method. Not all employees require unsupervised access to trade secret data while working remotely. The risk of inadvertent disclosure is reduced by limiting the number of employees given access. 

Vendors and Clients: Third party manufacturers or vendors often work with employees and require access to trade secret information. These details must be safeguarded while allowing business to continue. Companies should monitor policies and procedures used by third parties to protect the information they receive. 

The COVID-19 pandemic has changed the way the world does business. For many employees, working from home may become the new normal. Business must adapt to new routines and technologies to protect trade secrets.

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