Can Someone Really Walk Away With Your Business?

Steps to Take to Prevent IP Theft and                    
Protect Proprietary Workplace Information

By: Attorney Steven Rosenberg

Thanks to the latest technology such as Smartphones and laptops, it has never been easier for employees, whether intentionally or inadvertently, to walk away from their workplace with valuable, confidential information.  And if this proprietary information gets into the wrong hands, the results can be devastating to a business’s success and survival in a competitive marketplace.

Marital issues, money shortages and a need to "get ahead" are some of the reasons employees say they stole money or valuable information from an employer, according to one recent survey. 

A company’s proprietary, confidential information may be something as simple as a client list, or as complex as patented technology.  Whatever it is, however, it is valuable information, vital to a company’s success, and needs to be protected against the actions (nefarious or otherwise), of unauthorized third parties.

What steps should your business take to insure that its most valuable secrets and assets remain its assets?  First and foremost, you should include a Confidentiality or Non-Disclosure Agreement as part of the standard Employment Contracts that all new employees are required to sign.  While the existence of such signed agreements cannot guarantee that an employee still won’t walk away with the protected information, it will, if drafted properly, at least provide your business with legal recourse against such wrongful acts by an employee.

There are many factors to be considered when drafting a Non-Disclosure or Confidentiality Agreement, as it is important for each agreement to be tailored to fit the specific needs of the individual business.  For example, do your employees have access to confidential information such as working conditions and pay rates?  Do your employees have access to your customer database?  Are they privy to your company’s trade secrets, and/or new ideas coming down the pipeline?  Most importantly, are your employees aware, and is it clear to them, exactly what information is company “property”, and is proprietary in nature?

Also important to consider is whether your Agreement should incorporate a Non-Use provision in its employment contracts, as well as a Non-Disclosure provision.  A non-disclosure provision prevents an employee from disclosing the protected information to unauthorized third parties; while a non-use provision prevents the employee from using the information for anything other than the specified purpose, which is usually limited to his or her job related responsibilities.  

Whatever your company’s policies are with regard to confidential information, it is essential for the business to spell out specifically what information is considered confidential and as such, protected.  At the same time, when incorporating Confidentiality and Non-Disclosure Agreements into Employment Contracts, a business must make sure that the terms of any such agreements have not been drafted so broadly that they restrict employees’ rights to free speech.  For example, the Confidentiality clause that was included in the Employee Handbook of one of the nation’s largest wireless companies was found to be too broad because it prohibited the company’s employees from discussing basic work conditions and pay rates among themselves!

Even if your business has been operating with a Confidentiality or Non-Disclosure Agreement in place, or has incorporated such relevant language into its Employee Handbook, you still may not be fully protected.  Statutes, regulations and trends in case law are in a constant state of flux.  Language that may have been sufficient to protect your business and its assets several years ago, may no longer be effective.  It is advisable, therefore, to review your company’s confidentiality and non-disclosure/non-use policies every few years, to insure that they remain in compliance with current law.

The attorneys at South Shore Law have been advising businesses and organizations of all sizes for more than thirty (30) years on how to best protect and insulate their businesses through the use of Confidentiality and Non-Disclosure Agreements in their Employment Contracts. We would be happy to answer all of your questions on this subject or any other business related legal question. Contact us at South Shore Law and we can help protect your business interests. If you know a business owner or manager who may benefit from this information, please pass this along.

The information provided in this website and accompanying materials are all presented for informational purposes only and is not meant to be comprehensive legal guidance nor be interpreted as legal advice. Communications with South Shore Law, its lawyers and agents shall not be interpreted in such a manner as to form an attorney-client relationship. To begin exploring such a relationship, consult an experienced attorney at South Shore Law byfilling out the contact form or call us at 781-749-5600.