Protecting Confidential Information and Trade Secrets Protecting Confidential Information and Trade Secrets Presented by Michael C. Sullivan Denise N

Protecting Protecting Confidential Confidential

Information and Information and Trade SecretsTrade Secrets

Presented by

Michael C. SullivanDenise N. Brucker

Paul, Plevin, Sullivan & Connaughton LLPPaul, Plevin, Sullivan & Connaughton LLP

Applicable LawsApplicable Laws

• Uniform Trade Secrets Act (CC §§ 3426 et seq.)

– Derives economic value from not being known

– Is the subject of efforts to maintain secrecy– Includes:

• Customer lists and information• Techniques, formulas, specification

• Business and Professions Code § 16600


Key CasesKey Cases

• Public policy favors “open competition”– Hill Med. Corp. v. Wycoff (2001) 86 Cal.App.4th 895– Vacco Industries, Inc. v. Van Der Berg

(1992) 5 Cal.App.4th 34

• CA rejects “inevitable disclosure”– Whyte v. Schlage Lock Co. (2002)

101 Cal.App.4th 1443


Key CasesKey Cases

• Beware of “wrongful termination”– D’Sa v. Playhut, Inc. (2000) 85 Cal.App.4th 927– Thompson v. Impaxx (2003)

113 Cal.App.4th 1425

• Employee solicitation may be prohibited– Loral Corp. v. Moyes (1985) 174 Cal.App.3d 268


Recent CasesRecent Cases

• Narrow restraint doctrine rejected– Edwards v. Arthur Andersen (2006) 142 Cal.App.4th 603

• “No-hire” agreements unenforceable– VL Sys., Inc. v. Unisen, Inc. (2007) 152 Cal.App.4th 708

• Fending off employee solicitation– CRST Van Expedited v. Werner Enterprises, Inc.

(2007) 479 F.3d 1099


Best Practices OverviewBest Practices Overview

• Review/revise agreements and policies

• Analyze “institutional” protections• Address issues at all employment

stages– Recruiting– During employment– Termination and after


Nondisclosure AgreementsNondisclosure Agreements

• Revise your NDAs– Define “confidential information”– Include invention assignment (LC §

2870)– Revise non-solicitation clauses– Consider non-compete issues– Protect CI/TS information of others


Audit “Confidentiality” PoliciesAudit “Confidentiality” Policies

• Employee handbook provision– Require employee acknowledgment– Update/revise periodically

• Employee “blogging” policy– Prohibit disclosure of and define CI

• Computer network and internet policy

• Others?


“Institutional” Protections“Institutional” Protections

• Maintain “secrecy” of information– Control access to information

• Computer passwords• Sign-out sheets• Visitor logs

– Ban cameras (including cell phone cameras)

– Require third-party confidentiality agreements



• Implement document protection procedures– Proprietary legends– Copyright notices– Color coding– Locked file documents– Copying limitations– Waste disposal methods



• Look for inadvertent disclosure– Marketing materials– Company website– Employee blogs/presentations– Annual reports

• Review computer networks– Firewall protection– Data encryption


Applicant RecruitingApplicant Recruiting

• NDA for interview process– Protect information disclosed during

interview– Prohibit disclosure of others’ information

• NDAs with former employers?– Ensure legal review

• Provide secrecy instruction • Avoid detailed, technical questions


Hiring From A CompetitorHiring From A Competitor

• Consider how applicant is contacted– In writing and by whom?– Reflected in “on-boarding” documents?

• Provide secrecy instruction early and often

• Carefully draft offer letter– Include prohibition against disclosing

others’ information


Hiring From A CompetitorHiring From A Competitor

• Reminder following acceptance• Establish “ethical walls”

– Restrict certain projects– Segregate information– Written instruction to all employees

• Responding to cease and desist letters


During EmploymentDuring Employment

• Annual “employee awareness program”– Written reminders– Memoranda from executives

• Require NDAs and invention assignment• Employee training

– Identifying confidential information– Restrictions on its use and disclosure


Termination and Post Employment


• Exit interview– Oral and written reminder of obligation– Obtain written reaffirmation– Provide a copy of employee’s NDA– Obtain all company property

• Engineering notebooks• Marketing/business plans• Financial information




• Preserve integrity of EE’s computer– Emails– Hard drives– Back-up tapes

• Letter to employee’s new employer– Notify of post-employment obligations– Provide copy of NDA


Questions?Questions?

Documents

Protecting Confidential Information and Trade Secrets Protecting Confidential Information and Trade Secrets Presented by Michael C. Sullivan Denise N