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Trade Secret Theft and Your Small Business

With all the attention in the news about hacked emails, we thought it would be a good time to discuss the reality of hacking at a level many business owners can relate to: the small business.

As we have discussed before, small businesses are at risk of any of the threats a large corporation faces, including identity theft (read more on how to prevent ID theft at your business here). Do you have a plan for preventing and/or responding to an online security breach? Or, equally as important, trade secret theft?

Trade secret theft can bankrupt even the most successful business. What’s more, because a California trade secret plaintiff (such as a former employer suing its former employee) likely must identify its trade secrets with reasonable particularity before commencing discovery, it pays to invest in protecting your IP before it is stolen. Unfortunately, trade secrets are particularly susceptible to theft because of the secret economically valuable information they contain. Those on the inside may find that information too tempting to be leave behind when changing jobs. So how does a small business protect its intellectual property and confidential information from trade secret theft?

In California, obtaining protection is not all that simple. Absent limited exceptions, non-compete agreements are illegal under Business and Professions Code § 16600, meaning that is likely not an option.

So, what can California employers do?

Update Non-Disclosure Agreements

Hopefully, you have confidential/non-disclosure and trade secret protection provisions in your employment agreements. Ensure that these agreements been updated to comply with the recently enacted Defend Trade Secrets Act (“DTSA”) related provisions. 1429250549_18-128

Remember, under the law, your company will not be seen as having trade secrets to protect unless it has made “efforts reasonable under the circumstances” (under the California Uniform Trade Secrets Act) or has taken “reasonable measures” (under the DTSA) to maintain the secrecy of the information it claims to be a trade secret.

Computer and Social Media Agreements and Policies

Most trade secret theft occurs via electronic device. Make sure your company’s employment agreement has computer use and access policies and agreements that clearly outline ownership of all devices, that the devices may only be accessed for work related purposes, and that devices may be expected at employer’s will, to name a few.

These are just starting points to consider when implementing policies that protect your company’s intellectual property. For more information on how to prevent and/or handle trade secret theft, contact the experienced business lawyers at Hart, Wattesr & Carter today.

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