A Brief Guide to Guarding Trade Secrets

By Amy Wu

Aug. 24, 2006

    4Create rewards programs that might include incentives and bonuses for keeping information secret, says Andrew Sherman, an attorney at the law firm of Dickstein Shapiro. “A lot of companies just need to take the time and make the awareness,” Sherman says.

    4Use technology to your advantage and implement protection programs and cyber security technologies.

    Richard Power, an expert on cyber crime, says there are a number of ways to make it harder for employees to snag company information. Power recommends firewalls, intrusion detection and “smart cards,” which when encrypted operate similar to the way ATM cards do at banks. Even though the cards are more expensive than using just an ID and password, hackers will have a harder time cracking them, Power says.

    He suggests that companies monitor which Web sites employees go to, not allow laptops to be taken home, and change pass codes frequently. Some companies have gone so far as installing computer access based on fingerprint or retina scans.

    4Create policies for which documents can be sent and received from hand-held devices such as the BlackBerry, says Amy Timmons, a corporate security expert at the Segal Co., a private actuarial consulting firm based in New York City.

    4Don’t stop at checking references; expand to checking credit and doing background checks.

    4Hire someone who serves as the gatekeeper for trade secrets to work with human resources and information technology in selecting policies to implement.

    4Key management should sign confidentiality agreements and have an attorney present when discussing important information. Experts especially recommend this for startups and smaller companies.

    4Before hiring a candidate, ask them if they have brought any contacts or trade secrets with them from their previous employer. Receiving that kind of information can get a company in trouble.

    “It’s very important that when companies bring people in a company that they make sure they have been scrubbed,” said William Rooklidge, a lawyer specializing in intellectual property at Howrey LLP in Irvine, California.

    4Define what information constitutes a trade secret and limit the information to select staff. Companies should restrict access to trade secret-related documents to only those people who need to know; track who is accessing those documents, and when. Changes to those documents should also be audited, says Segal’s Timmons.

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