February 17, 2021

By: John R. Brumberg

Within the last year millions of employees find themselves working from home for the first time. With the sudden shift to working from home, companies are facing new and unique challenges in order to protect trade secrets and confidential information.

Trade secrets can include formulas, drawings, patterns, compilations including customer lists, programs, devices, methods, techniques, and processes. There are several ways you can protect your valuable trade secrets while your employees work from home. Here’s how to do it.

The value of trade secrets lies in the competitive advantage they provide your company. Today, information is more easily shared, putting trade secrets more at risk than ever before. The risk of failing to protect a company’s trade secrets in the context of remote work has markedly increased. Employees and the devices on which trade secrets are stored and viewed may be under less direct corporate supervision. The penalty in lost intellectual property and company investment can be significant, if not catastrophic.

The law requires that a company take “reasonable measures” to protect its trade secrets. What are “reasonable measures” when most of a company’s work force is working remote?

We recommend the following steps in order to protect trade secrets in a remote work environment. These initiatives will require company-wide coordination among different departments, including IT, HR, legal, and management.

• Clearly identify for employees what specific information your company considers to be trade secrets. Mark the documents with a stamp or watermark that says, “TRADE SECRET”. Don’t stamp something as a trade secret unless it is a trade secret. By claiming an overly broad swath of information to be trade secrets, a company risks confusing its employees. Remind remote employees periodically that the protection of trade secrets is a corporate priority. Pop-ups can reiterate the importance of security each time a trade secret is accessed via electronic device.
• Limit access to trade secrets to those employees who have a “need to know” for each trade secret. Access to specific trade secrets or groups of trade secrets should be protected with passwords, encryption, and other secure methods.
• Require strong passwords that expire. Password protection should follow the trade secrets onto whatever device such information resides. Companies should consider prohibiting the transfer of trade secret information from the company’s network onto personal computers or storage devices of employees. Companies should consider using two-factor authentication or remote authentication protocols to further protect information.
• Invest in hardware and software so that your employees can work efficiently on corporate-controlled systems.
• Companies should limit physical printing of trade secret documents. If trade secrets must be printed, instructions should be provided to employees to ensure the “Trade Secret” stamp or watermark is also printed, and to require the secure destruction of printed copies.
• Invest in remote download monitoring software for trade secret files. Keep a running log on who accesses each trade secret or trade secret document.
• Stay current with hacking and virus protection protocols and software. Institute firewalls between your internal network and untrusted external networks, including the Internet and your employees’ home networks. To the extent possible, encrypt your most valuable trade secrets.
• As for the networks and devices of employees working from home, consider software and application whitelisting or blacklisting to limit risks from outside programs networking with the company’s systems.
• Prepare a plan to secure company devices and materials upon termination of individual employment. Ensure this plan is functional even if the employee works from home and hasn’t been to the physical office in months.
• Consider enacting a corporate policy or policies to specifically set forth what information is a trade secret and how it should be handled. The more valuable a trade secret, the more protection is warranted. Have appropriate employees sign confidentiality agreements.
• If your company shares trade secret information with third parties, clearly set forth the scope of the information-sharing agreement including non-disclosure provisions and make it binding on everyone who works on the project.
• Warn employees not to share access or information with family or friends who may be living in or visiting at the employee’s remote location.
• Conduct periodic audits to address the strength of your company’s trade secret protection. Outside consultants and counsel can identify risks your company might miss.
• Take immediate action if unauthorized disclosure is suspected.

If you would like more information, or have any questions, please contact the lawyers of our Business and Commercial practice group.