Safeguarding Trade Secrets

Many companies are successful as a result of continuous and consistent efforts to keep proprietary business information confidential.  Confidential business information, otherwise known as a “trade secret,” can be particularly valuable to a company.  It gives the company a competitive advantage over others in the industry because the information is not widely known.  Safeguarding trade secrets is also important because it confers economic benefits on a company which extend well beyond the mere value of the secret itself.  Here are some ways that companies can limit access to its trade secrets.

Use Non-Disclosure Agreements 

 A Non-Disclosure Agreement (NDA), also referred to as a confidentiality agreement, is a great way to remind and bind those employees, contractors, consultants, and suppliers who have access to trade secrets to maintain their secrecy.  NDAs are commonly given to employees at hirings, promotions, or when they are assigned to new projects, to ensure that any confidential information that they encounter while on the job remains confidential.  NDAs should identify what information is to be kept confidential by the employee, how long the NDA is intended to last, and should be clearly explained to the signing employee, contractor or supplier.

Keep Information on a Need-To-Know Basis

It is prudent to maintain the secrecy of confidential business information and to grant access only to those who need to know the information and only at such times that they need to know it.  Once a company has identified a trade secret, there are a number of strategies that companies can use to protect information.

For example:

Companies can identify confidential business information and then designate certain projects as needing special clearance status in order for an employee to participate or access the projects.  Different levels can be assigned based on the importance of the information’s confidentiality.

Companies can use special designations, such as “confidential” or “trade secret” for sensitive documents.  Both digital and printed documents can be labeled in this manner.  Labels should only be used for information that is truly meant to be kept confidential.

Companies can password-protect sensitive electronic documents to limit employee access.

Companies can implement policies to limit the printing and distribution of confidential business information.

Educate Employees About Company’s Confidentiality Policy

Developing and implementing a company-wide policy for handling trade secrets educates employees about their responsibilities when it comes to keeping protected information safe.  Not only should the policy be included in the company handbook, but regular training for employees should reiterate the importance of securely handling sensitive business information.

To discuss strategies to safeguard trade secrets, visit Parsons & Goltry at or call 480-991-3435.

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