27 Jan In a down economy, protecting trade secrets is not an option
Madison, Wis. – Maintaining a competitive edge in business in the midst of a down economy is difficult enough without the threat of having company trade secrets stolen.
But when it comes to securing assets that differentiate a business from its competition, many companies fall short. American businesses lose an estimated $150 billion annually in trade secret theft, according to national crime statistics.
Small and mid-sized targets
Most of the losses occur among mid-size and small businesses that are unaware of steps that can be taken to protect trade secrets or don’t have the resources to implement an effective effort to protect such assets.
Yet most businesses can’t afford such losses, especially in times like these. Now more than ever, businesses need to be aware of the trade secrets they do have and take the necessary steps to protect them.
Simply put, a trade secret is information a business wants to keep secret because it provides an advantage over competitors. Almost anything can qualify for trade secret protection if it provides value and is kept secret. Unlike patents, trade secrets can be copied and used if the owner doesn’t take care to keep them secret.
Most states have adopted some form of the Uniform Trade Secret Act to enforce protection of trade secrets. However, businesses need to take reasonable steps to protect their trade secrets through confidentiality agreements, keeping information in a secure location, and limiting the number of people with access to sensitive information.
It is prudent to create different levels of protection depending on the level of importance. For example, there may be one level of protection appropriate for most confidential information, and another more restrictive level for secrets that are at the heart of your company’s success.
The first step in protecting trade secrets within a business is to know what they are, something that can be accomplished by conducting an audit of everything that gives a business its competitive edge. The best way to do this is to look at different areas of a business – administration, finance, operations/production, purchasing, etc., and identify anyone or anything that provides a competitive edge.
Upon identifying potential trade secrets, they should be evaluated to determine which are most likely to be trade secrets. Those assets should then be appraised and assessed to determine the value and appropriate level of security or protection needed.
Trade secret audits can be conducted by a company’s employees or by outside consultants. It is advisable to include legal counsel in the audit process as a way to ensure appropriate protection is given to assets that need it the most.
Educating employees about the importance of trade secrets is a key element in securing a business’s assets. The level of importance can be reinforced by marking appropriate material as confidential, restricting access, monitoring employee email and Internet use, maintaining logs of all requests to access sensitive information, controlling visitors in the workplace, and implementing and enforcing a confidentiality policy.
Business owners and managers may not be able to control the economy, but they can control access to the trade secrets that keep a business unique and competitive. Making the effort to secure those assets is one way to maintain viability.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.