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Law in the Marketplace: How to protect trade secrets

For the Monitor
Published: 10/23/2021 2:30:11 PM

In my column on Sept. 13, I discussed the New Hampshire definition of the important legal term “trade secret,” and I explained that what many business owners may consider to be trade secrets may only be confidential information. Briefly, an item of information or a procedure is a trade secret only if:

■It is information in your possession that is not commonly known by the public;

■It is actually or potentially of economic value to you because it is not known or legally ascertainable by other persons who can obtain economic value from it; and

■You are making reasonable efforts to keep it secret.

Let’s assume, however, that your business owns information or procedures that fully comply with the New Hampshire definition of trade secret. What must you do to protect these secrets? In other words, what are the above “reasonable efforts”?

The question is critical, since, by definition, trade secrets are critical to the success and quite possibly to the very survival of your business.

Below are the main protective measures you should comply with. But there may well be additional measures that you will only know about if you consult an intellectual property lawyer. There are lots of good intellectual property lawyers in New Hampshire. Find one for your business!

To protect your trade secrets:

 

You must make all of your employees sign a properly drafted trade secret agreement. This agreement may require specialized tailoring that only your intellectual property lawyer can provide you with.

You must make all third parties to whom you disclose your trade secrets sign a trade secret agreement before you make the disclosure; and you should choose these third parties carefully and make sure that you can trust them. If one of them does disclose one of your trade secrets, you may have a hard time proving the source of the disclosure.

You must maintain your trade secrets in files or other locations separate from information you possess that does not qualify as trade secrets. Doing so may be a hassle for you and your staff; but it’s a necessary hassle.

You must mark all documents that contain your trade secrets with a trade secret marking (sometimes referred to by intellectual property lawyers as a trade secret “legend”).

In areas of your business premises where your business is making use of your trade secrets (such as where, if you are a manufacturer, you use trade secrets in your manufacturing), you should post highly visible trade secret warnings.

 

6. You should keep documents containing your trade secrets under lock and key or password protected — another hassle for you and your staff, but again, a necessary one.

 

7. If you admit third parties to places where you are using your trade secrets, you should

make them, as indicated above, sign trade secret agreements before admitting them.

8. If you have an employee manual, you should set forth in it in forceful terms the obligation of your employees to protect your trade secrets; you should describe the measures they must use to do so; and you should consider providing that if they neglect these measures, you will have to fire them.

It’s not fun to have to take all of the potentially numerous measures necessary to protect your trade secrets. But a failure to do so could destroy your business.

John Cunningham is a lawyer licensed to practice law in New Hampshire and Massachusetts. He is of counsel to the law firm of McLane Middleton, P.A. His practice is focused on LLC law and tax, LLC formations and the handling of LLC disputes and lawsuits. His telephone number is (603) 856-7172. His email address is lawjmc@comcast.net. His website is: llc199a.com. For access to all of his Law in the Marketplace columns, visit concordmonitor.com.




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