Tricks of the Trade(secrets) part 8

Business size often makes a difference in protection of trade secrets and maintenance of trade secret status. For example, imagine five individuals who decide to form a pharmaceutical company. Further imagine that each individual brings to the table his or her portfolio of inventions as well as confidential and proprietary information. These founding individuals may agree that, in exchange for equity voting stock, each individual will transfer ownership of this intellectual property to the future company. These individuals also agree to comply with specified confidentiality and non–compete provisions to protect this new intellectual property asset.

Reaching such an agreement would be cumbersome with thousands of shareholders and equity and non–equity partners of a large company. Furthermore, a small business does not require a full-time individual to supervise all confidential information matters on a full time basis. Instead, to minimize costs and conserve time, one person is the liaison between the business and outside legal counsel. As part of his or her business obligations, this person can meet with the attorney on an as-needed basis. This is particularly true for a walk through to update the inventory and status of confidential information and to insure that as much as information as possible qualifies for trade secret status.

This approach should be different for companies with numerous business locations and geographically far-flung facilities. Such an organization requires many more attorneys and other designated and specialized in-house individuals. There should be at corporate headquarters an individual who creates and implements confidentiality policies a well as accessibility tiers to certain information.

There should also be clear explanations of each tier of information, who can access it and/or distribute it and to whom, and the consequences of breaching the company’s policy. These policies must be clearly designated and available in updated employee manuals that are affirmatively distributed to each office and site location. Ideally, they should also be available at a company microsite that is only accessible to company employees. That way, an employee will not be terminated for breaching a company confidentiality policy to which he or she never had straightforward access.

Recommended provisions for a company’s confidentiality policy include:

1. The purpose of the corporate policy for protecting company information;

2. Clearly defined terms such as confidential information, personal information, public information, and material information, and third party confidential information;

3. Only authorized access to confidential information by employees and contractors;

4. Notice that confidentiality continues indefinitely post-employment, and employees must
return all materials containing confidential information to the company at termination of
employment; and

5. Authorization of written materials or speeches prior to distribution or publication.

© 2010 Adrienne B. Naumann, Esq.

Ms. Naumann does not sponsor or endorse the advertisements at


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: