How Elite Security Pros Are Winning The War Against Digital Espionage And Data Privacy Leaks – In The Streets And In The Courtrooms
by admin
This is a guest post from Julie Machal-Fulks of Scott and Scott llp. They are a Dallas TX business and technology law firm.
Companies dealing with privacy issues should recognize that internal safeguards related to corporate information are as important as those dealing with consumers’ personal information.
A company needs to protect its confidential or trade-secret information from disclosure by employees and outsiders. Failing to implement appropriate safeguards may lead to important business data falling into the hands of those who would use it for malicious purposes. But, there are limits to what a company trying to protect its data can do. Exceeding those limits may lead to a court finding that the company’s program is unenforceable or, worse, that it constitutes an actionable breach of employee rights.
An effective intellectual property protection program must be carefully tailored to a company’s actual business needs.
A company that never formalized a set of processes or procedures to protect its business secrets needs to start the project with a comprehensive IP inventory. The inventory categorizes all of the protectable information owned by the company, and it can be challenging in some cases to draw the lines between different kinds of intellectual property (IP).
However, a complete inventory is a crucial first step to determining what protective measures are necessary for each item of IP that the company owns.
Of all the IP protection policies, trade-secret policies are usually the most complex. Protections for company patents, trademarks and copyrights are generally controlled by statutes, making them easier and less risky to implement and maintain. However, trade secrets require appropriate internal measures to guard against their unauthorized disclosure.
Those measures depend on the kinds of secrets that are at issue, on the importance of those secrets to the company’s profitability, and on the legal requirements of the state where the company is located.
One of the most difficult challenges that a company will face in protecting its trade secrets is crafting a set of efficient and effective policies that restrict access to the trade secrets without preventing employees from doing their jobs and also without raising any conflicts with those employee’s rights.
In some cases, if a company goes too far in trying to protect its trade secrets or other intellectual property, a court may determine that the policy is unenforceable.
For example, a company may want to protect its IP by requiring its employees to agree not to compete with the company following the end of their employment in order to dis-incentivize misuse of company secrets. However, many states, like California, have absolute prohibitions on these types of provisions, and most states will enforce them only if it is necessary to protect the company’s legitimate interests.
Companies may try to take it one step further and institute a prohibition against employees speaking with media sources regarding company activities. Companies typically try to justify such a policy by saying it is designed to prevent leaks of confidential information. However, that kind of policy may violate laws pertaining to whistleblowers and to employee retaliation
To ensure the protection of corporate secrets, companies must carefully consider which policies are required to prevent data leaks. Too little, and the secrets could escape company hands, with a court possibly even finding that the company’s is not entitled to an award of damages for a leak of information because it had a lack of adequate protections. Too much, and the company may be unable to enforce its policies and could be held liable for damages claimed by employees.
That careful consideration best occurs within the context of a broader review of company IP, to ensure that the company is addressing its long-term goals with a holistic regime of IP protections. Knowledgeable IP counsel plays a vital role at every stage of that process.
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Doug Voccelli
Jan 3rd, 2011
I never thought to take the employee’s rights into consideration when it came to protecting sensitive internal data. That’s a really good point of caution to keep in mind.