ments, you may wish to have them sign one.
Because non-competition agreements are
very contentious, evidenced by their outright
prohibition in some states, they should only
be reserved for employees with whom trade
secret misappropriation or disclosure is a serious threat. Many companies have decided
that due to the likelihood of a court-chal-lenge to a non-competition agreement, and
due to the very limited restrictions they provide, they are rarely worth the trouble.
The same non-disclosure procedures
should be applied to all employees at your
business, top to bottom. This includes temporary or part-time employees. These types
of employees, it turns out, make the risk of
disclosure that much greater—they owe little to no loyalty to your company and frequently are on the move seeking new
employment. The short-term clerical worker
or part-time service worker should at least
sign a basic NDA acknowledging that the
nature of the work may involve access to
confidential information. Chances are it is
unnecessary for these types of employees to
sign non-competition agreements.
Eventually the day will come when Bonnie’s and Clyde’s services are no longer necessary and it is time to terminate them as
employees. As a savvy business practice, and
a part of your program to protect your trade
secrets, you should conduct exit interviews
with departing employees, usually through
the human resources department or an outside firm. These interviews are much more
than a simple “goodbye, wish you luck”
kind of encounter. Protocols need to be followed to ensure the departing employee is
not leaving your company with trade secrets. An exit interview checklist should be
used to document the termination.
Whereas in the beginning you were concerned about them bringing unwanted
trade secrets to your company, you are now
concerned about the reverse situation—
Bonnie and Clyde leaving your company,
seeking new employment, and stealing or
disclosing the trade secrets they learned
while on the job. Bonnie and Clyde, as departing employees, should be asked to sign
a new document during the exit interview.
A trade secret acknowledgement and termination agreement is just another way to
remind them of their duty not to disclose
your trade secrets. The termination and exit
interviews should review the provisions of
the agreements they signed. Any issues
about future employment or trade secrets
should be sorted out before they formally
leave the company.
The first and most logical thing to discuss
in the interview is the reason for leaving.
Talk about why the employment came to an
end; this can be a result of termination or a
voluntary decision to leave the company. If
you decide to terminate Bonnie or Clyde, explain your reasoning for doing so. If Bonnie
or Clyde are voluntarily leaving their position, ask why that is the case—probe for
specifics and note any discontent or dissatisfaction. Talk about the work or assignments
in which they were involved. From there, discuss future plans, especially relating to future
employment. Identify the new employer and
position and ensure that the Bonnie and
Clyde understand their duty of confidence
regarding disclosure and use of a trade secret. Finally, make sure Bonnie and Clyde
aren’t about to walk out the door and steal
valuable company materials. Ask them to
turn over their badges and keys; supervise
them cleaning out their offices or work-spaces. For any further questions concerning
confidentiality or other obligations, let them
know they can call your company any time.
A well-run and properly documented
exit interview will minimize the pains associated with employee termination. It is
also just one more way you can prove you
took reasonable steps to protect yourself
from trade secret misappropriation. Armed
with non-disclosure agreements, non-competition agreements, and documented exit
interviews, you have established a strong
“protective wall of paper” to help guard
you from misappropriation or unwanted
disclosure of trade secrets.
But what if Bonnie and Clyde turn out
to be a couple of dirty rotten thieves, like
their historical namesakes, and have misappropriated your trade secrets? You will
likely file a lawsuit against them and you
better! Furthermore, you will likely want to
seek injunctive relief to stop them from continuing to use or disclose your trade secrets.
A judge will need to see some kind of evidence proving that Bonnie and Clyde were
not allowed to use or disclose the information. And that’s where the NDAs, non-competition agreements, and exit interview
documents come in to play. After viewing
these documents, a judge will be much
more likely to see that Bonnie and Clyde
have not kept in confidence your trade secrets and broke a contractual agreement.
Injunctive relief may even be awarded to
help prevent any further harm.
In a professional-strength trade secret
audit, you will scour each and every one of
the NDA’s, non-competition agreements and
your entire exit interview process. But, that’s
really just the beginning. Other documents
that will serve as bricks in your “wall” may
include this partial list: insurance documents, SEC filings, partnership documents,
grants and contracts with the federal government, Patriot Act compliance documents, import and export compliance
documents, patent application filings, publications, slide presentations, toll manufacturer’s agreements, vendor agreements,
work-for-hire and other consulting agreements, software licenses, court proceedings,
etc. And, the litigators toy-box where we
routinely and joyously find almost ALL of
the evidence against your bullet-proof wall-of-paper: e-mails and texts. Employees say
the stupidest damned things in e-mails and
texts (“Naw, that’s not a trade secret, don’t
worry about it!”; “Yeah, that’s a big company trade secret supposedly, so don’t tell
anyone else, OK?”; If you promise not to
tell anyone else, I will tell you that we are
just about to launch a big [……..]). I have
seen it all, and I continue to be amazed!
So, when you conduct a professional-strength trade secret audit, get ready to feel
a little irritated at, and maybe even a little violated by, your professional auditors. Ultimately though, the goal is to feel a whole lot
more secure. If it’s done right, you should feel
like you have been attacked by someone trying to prove you DON’T have any pro-tectable trade secrets. But, when it happens
for real—Powers That Be Please Forbid—
you’ll be locked, loaded and the thief will be
staring down both barrels of a sawed-off 12-
gauge shotgun poking out from behind a
wall of paper. Like Pink Floyd said, “All in
all it was all just bricks in the wall.” CW
Note: The author would like to thank his
clerk, Josh Fuller, for his significant contributions to the legal research and writing
that produced this column.
