Tricks of the Trade(secrets) Part 7

There are numerous recommendations for protection of confidential and proprietary business information from other people. Here are additional suggestions that are cost-effective but require diligence and consistent implementation to maintain valid trade secret status.

Any business can easily afford physical restriction of visitor and employee access to confidential information and specific confidential work areas. Unfortunately, in several instances business owners have coincidentally informed me that they allow strangers, and even competitors, unrestricted access to their premises. However, this misstep can be easily remedied by politely but firmly not allowing designated persons within a particular office or facility.

Moreover, employees in larger businesses should not linger unattended in offices and facilities beyond their own work areas without proper authorization. Production machinery and confidential production techniques should be placed at the posterior of facilities or behind walls and partitions. Visitor badges, as well as security guards with electronic surveillance cameras, are wise investments for large premises that are otherwise difficult to monitor for unauthorized persons and activities.

Another limited manner in which to prevent large-scale employee access to confidential information is the division of production or another process into separate portions. In this manner each employee is only knowledgeable about a specific component of the project. Another limited prevention approach is motivation of employees to protect confidential information by promoting them to equity business owner status. The theory behind this approach is that the employee/owner has a stake in preserving the company and confidential information that provides to his or her own financial well-being.

For new employees who are strangers to the business management, there should be at least a cursory background check: In my experience even large banks have inadvertently hired unsavory characters who embezzle from customer accounts. Even more insidious is the corporate “mole:” Businesses of all sizes and types must take care not to hire employees who surreptitiously work for business competitors. This is particularly a problem where a person is immediately hired onto confidential projects although the business owners have no knowledge of this person’s ethical track record over a long employment period.

Independent vendors include persons such as suppliers, attorneys, accountants and graphics designers. Except for attorneys, all vendors should sign confidentiality and non-compete agreements prior to access to confidential information or the actual business premises. Even after signing these agreements, vendors should be limited to information and premises access on a very narrow need to know basis.

There are also persons whose responsibilities simulate those of employees, but they report their income on federal 1099s and not W2s. Although these persons are independent contractors for federal tax purposes, if their work dynamic resembles employment then they are considered employees under other laws. This is true for intellectual property law ownership generally and misappropriation of trade secrets in particular. Consequently these independent contractors should also sign an initial agreement that contains the confidentiality and non-compete provisions of the W2 employee agreement.

© 2010 Adrienne B. Naumann

Ms. Naumann does not sponsor or endorse the advertisements at


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