Avoid These 6 Mistakes in Safeguarding Proprietary Information

As a lawyer who litigates trade secrets and noncompete cases, I see firsthand the countless mistakes companies make when trying (or forgetting) to safeguard their proprietary information. Litigation could be a very expensive lesson, even though the effect is favorable. So it is much cheaper and safer in order to avoid making mistakes to begin with.

Here are a few of the very most common errors that I’ve seen result in unwanted disclosure or usage of proprietary information. Avoid these mistakes and you’re on the way to minimizing the risks:

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1. Neglecting protection efforts. Way too many companies usually do not put real effort into protecting their proprietary information. Entrepreneurs and companies tend to be stretched thin. It certainly is easy to spotlight revenue-producing endeavors or putting out fires instead of on protection efforts that may not yield instant results.

But ignoring the chance of unwanted disclosure can be like ignoring your wellbeing. Eventually, it will meet up with you. Like everyone else is going for an annual physical, periodically evaluate protection efforts at your firm. Spending handful of money to have agreements drafted can protect you from the chance of unwanted disclosures. Begin by consulting with a qualified attorney with proven experience in this area who can provide recommendations.

2. Lacking contractual protections. Contracts will be the best tools for protecting proprietary information. At the very least, every person with usage of these details should sign a nondisclosure agreement. When used appropriately, nonsolicit and noncompete agreements provide a lot more protection.

Unfortunately, companies frequently usually do not require these agreements, often due to an aversion to investing in legal fees. A number of these organizations later find out that the fees associated wtih preparing the agreements pales compared to the expenses of lost proprietary information or litigation to treat the damage.

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3. Ignoring small, but important details . I am amazed by how frequently companies spend enough time and money to create noncompete, nonsolicit or nondisclosure agreements and then forget to have employees sign or date the agreements. Other times, companies misfile (or lose) the signed agreements.

Unsigned agreements tend to be unenforceable and undated agreements could cause enforcement problems. Missing agreements are simply about worthless. In order to avoid this, implement a consistent employee-intake procedure and also have designated staff members in charge of making certain all required paperwork and contracts are signed, dated and filed appropriately.

4. Forgetting about vendors and consultants. Employees aren’t the only ones with usage of proprietary information. Third parties, such as for example vendors and consultants, frequently need usage of this information. Each one of these third parties also needs to sign nondisclosure agreements.

5. Comingling proprietary and routine information . Your company’s proprietary information is special. In lots of ways this is exactly what makes your company unique and successful. To the extent possible, keep documents with these details separate and called confidential. That way it’s simpler to restrict usage of them and decrease the risk of disclosure. Even better, implement a confidential-documents policy that dictates the way in which such documents should be labeled, shared and stored.

6. Overestimating employee loyalty . Certainly, trust is crucial to healthy employer-employee relationships, but caution can be warranted. In the event that you require all employees to sign nondisclosure or noncompete agreements, don’t make an exception for someone you take into account a pal or who you could ever see using proprietary information against you. This might sound cynical, but I’ve seen many companies burned by key employees who management never imagined would harm the business.

Protecting proprietary information will not must be complicated or expensive. Simple measures, implemented in a deliberate, consistent fashion, can significantly decrease the risk of disclosure. Should you have questions, consult a qualified attorney.

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