Protecting trade secrets:  Laws, violations + how to identify/protect trade secrets when employees leave

Abstract

The article examines the trade secret violation problems associated with the desire of migrating employees to use their knowledge in their new position and suggest options available to firms to solve these conflicts. As early as 1988, an unpublished study by the National Institute of Justice of 150 large high technology firms surveyed believed that they had been victims of trade secret theft. In 2001, seven then-current and former executives of Cadence Design Systems Inc. agreed to plead no contest to misappropriating the computer code of Cadence for use in the products of Avant! Corp., the new firm they founded. These three forms of legal protection–patents, copyrights and trademarks–usually require the firm to register the intellectual property with the government and to provide public disclosure. When employees leave, they mentally take all the knowledge they have developed or used during their time with the firm. In the U.S., trade secret law is now a combination of state and federal law. Some countries have no trade secret laws at all–Chile, Colombia, Costa Rica, Ecuador and Venezuela are examples of such countries. Examples of technological and physical protection of information include the use of roving guards, computer passwords, passkeys, identification badges, biological identification checkpoints and even intra-facility positioning systems.

Keywords

• trade secrets;
• intellectual property;
• trade secret theft;