Protecting your company when an ex-employee steals trade secrets

Protecting your company when an ex-employee steals trade secrets

Maybe your company uses a proprietary method to refine materials which makes it easier, faster or cheaper for you to turn out products than others in the same industry. Perhaps you found a way to commercialize your grandmother’s locally-famous cookie recipe, which has driven the success of your bakery or restaurant.

When you have specific processes or recipes that set your business apart from other companies in the same field, those formulas are trade secrets. Your trade secrets make your company competitive and can be a major contributing factor to your overall success.

Unfortunately, anytime you hire a worker, the potential exists for them to access, steal or even sell your company’s trade secrets. What can you do if a former worker opens up a competing business or starts working for an existing local competitor?

Review your employment contract before you take action

Did you have your employees sign non-compete agreements or non-disclosure agreements as part of their initial hiring? Did you specifically prohibit them from sharing the details of certain processes with others because it was proprietary information?

Inclusions about secrecy and privacy in your employment contract may give you specific legal options to pursue against the employee for their theft of your information.

You can try to resolve the matter outside of court

The theft of trade secrets is not just unethical. It is also illegal. Under the Economic Espionage Act of 1996, those who intentionally steal trade secrets for their own use or for sale to another company have committed an act of espionage punishable under federal law. Providing the other business or your former employee with a written letter advising them to cease and desist the use of your trade secrets and demanding compensation while also referencing the illegality of their behavior may be enough to prompt them to make amends to you.

Prepare to prove the value of your secret

If you can’t reach an agreement outside of court or if you want to secure a legal injunction against the business or individual using your trade secrets, you will need to pursue legal action against the worker or the company.

Doing so requires that you prove that the information taken qualifies as a trade secret and that the other party intentionally stole information from your business that will have financial consequences for the company. Getting the right help with intellectual property and trade secret issues from the earliest stages of addressing such problems can increase your odds of a favorable outcome.

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