In today’s digital society, protecting confidential and proprietary business information is next to impossible. Employees on a daily basis have access to an employer’s secret and extremely confidential information. Electronic information can be stored on smart phones, flash drives, in the cloud, and on employer and employee cell phones.
In Georgia, trade secrets are protected by the Georgia Uniform Trade Secrets Act. Generally, a company’s customer list and other sensitive company information are protectable by the Act. Under the Georgia Trade Secrets Act, the term trade secret is defined as technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans or a list of actual or potential customers or suppliers, which is not commonly known by or available to the public.
When a company takes reasonable measures to protect its valuable and confidential information, and if the information is generally not known to the public, then a company’s trade secrets will most likely be protected. In addition to customer lists and related data, many other forms of information may also be protected, such as business plans, research and development data, product manuals, personnel information, designs, blueprints, schematics, ingredients, formulas and manufacturing techniques.
It is extremely important for a company to have policies, procedures and agreements in place in order to protect a company’s assets and intellectual property, before an employee leaves. Below is a checklist of items that a company should consider in order to protect its valuable assets.
Confidentiality and Return of Records Policies. A company should have policies and procedures in place that clearly identify what is considered a company’s protected trade secret [customer list, pricing, vendors, referrals, marketing data, business plans and projections, etc…]. In addition, if an employee resigns or is terminated, the company should have a written procedure in place that will require a former employee to immediately return to the company all protected and confidential information.
Confidentiality and Non-Disclosure Agreements. In order to protect a company trade secrets, every employee should sign a confidentiality and non-disclosure agreement. The confidentiality and non-disclosure agreement may be part of a well prepared employee manual or a separate document.
Keep Confidential Information Confidential. Information that is identified by a company as a trade secret or considered confidential should be treated as such by all employees, or it may lose its confidential status. A company should train it’s employees to take the necessary precautions in order to protect against the wrongful disclosure or misuse of confidential information.
Bring Your Own Device or Employer Provided Device Policies. If a company permits an employee to use their own personal electronic devises for business purposes [cell phones, iPads, laptops, etc…], then a company should have a written policy in place that will permit a company to periodically inspect an employees electronic devise in order to ensure that confidential company information is protected and secure.
In addition, if an employee resigns or is terminated, a company should also have a written procedure in place that outlines specifically how a company will be permitted to purge confidential information from the employees personal electronic devise upon departure. The information must be purged immediately upon an employee’s departure.
Non-Solicitation and Non-Compete Agreements. A company should have its key employees sign a non-solicitation and/or non-compete agreement. A non-compete agreement will prevent an employee from performing the same or similar services for a competitor, for a certain period of time, within a certain specified geographical area, for specific clients or other confidential relationships. A non-solicitation agreement will prevent a current or former employee from soliciting or contacting the company’s customers. Both types of agreements must be designed to protect legitimate business interests, be reasonably limited in duration and geographic scope, and be applied consistently, in order to be enforceable.
Immediately Cut Off System Access. A company should immediately cut off an employee’s access to company information upon an employees planned or unplanned departure [or even in advance of an employee’s departure, if at all possible]. In addition, a company should immediately change all of its passwords upon an employee’s departure, especially in those areas where the employee has access to confidential and protected company information.
Reminder Letters. After an employee is no longer employed by a company, the company may want to consider sending out a reminder letter to the former employee, with sets forth the former employees post-employment contractual obligations [i.e., non-compete, non-solicitation, and non-disclosure of confidential information, etc…].
In many cases, the most valuable assets of a company, is a company’s intellectual property [customer lists, confidential company data, software, business plans, etc…], and the protection of these valuable assets may very well be necessary in order to ensure the viability of a company. If a company takes the required steps in order to protect its assets, then a company should be in a good position to prevent a devastating and potentially costly loss in the event of an employee departure.
Stuart J. Oberman, Esq. handles a wide range of legal issues for the business community including business transitions, sales, real estate transactions, lease agreements, employment law and entity formation. For questions or comments regarding this article please call (770) 554-1400 or visit www.obermanlaw.com
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