Protecting trade secrets
11 Aug 2017
Trade secrets are a form of intellectual property which can be broadly described as information which is known only by a particular business and is used by that business to obtain an advantage over its competitors. Trade secrets are an important part of a business and therefore protecting trade secrets is essential.
Trade secret theft through hackers, former employees and third party contractors is a major risk facing businesses today. They are no longer protected once they become public and companies have no legal recourse unless they can prove the information was both valuable and secret, and that it was disclosed by a person with an obligation to keep it secret.
In order to ensure trade secret protection, it is important for companies to:
- Maintain inventories of their trade secrets;
- Secure computer networks;
- Monitor employee electronic use;
- Providing training to employees on the handling of trade secrets;
- Develop corporate policies dealing with trade secret protection; and
- Require anyone who comes into contact with trade secrets to sign non-disclosure agreements, and where these parties are employees, restraint of trade agreements may also be made use of in order to ensure trade secret protection.
Our courts are reluctant to enforce excessively onerous restraint of trade agreements because of the restrictive effect thereof on the rights of employees to practice their trade and make a living. The courts will critically consider whether the employer has a valid interest worthy of protection through a restraint of trade agreement. They will look at the employer’s business and the employee’s role in respect of the business. Where an employee has never had any exposure to the employer’s trade secrets, a restraint of trade agreement may not be appropriate.
Companies should therefore ensure that confidentiality and non-disclosure agreements are carefully drafted in order to supplement the employee’s common law duty to keep his employer’s confidential information secret.