Protecting Trade Secrets in Security-Challenged Remote Working Scenarios

Trade secret protection is something that haunts companies and has for years. The work from home environment has only made that task even more of a challenge with the expansion of employees working remotely.  In Texas, companies are protected from the misappropriation or theft of trade secrets under the Texas Uniform Trade Secrets Act (“TUTSA”). TUTSA basically provides the framework on what companies need to know to protect their trade secrets in Texas.

How TUTSA Provides Protection

TUTSA defines a trade secret as “all forms and types of information, including business, scientific, technical, economic, or engineering information,” and any of the following items regardless of how they are stored or kept:

formula, design, prototype, pattern, plan, compilation, program device, program, code, device, method, technique, process, procedure, financial data, or list of actual or potential customers or suppliers, whether
tangible or intangible.

However, there are two remaining requirements that must be met in order to confer trade secret status.  Those are:

(A)  the owner of the trade secret has taken reasonable measures under the circumstances to keep the information secret; and

(B)  the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic
value from the disclosure or use of the information.

Being able to show that the information derives independent economic value is essential, but the primary risk posed by the WFH environment relates to the measures taken to keep the information secret. Basically, a company needs to take reasonable steps to protect the trade secret. Courts undertake fact specific inquiries to determine whether a company satisfies this prong.

What Can Businesses Do To Ensure Safety of Trade Secrets

There are no hard and fast rules of what a company needs to do to meet these requirements. However, case law indicates that there are some minimum efforts that can be taken in some combination to meet the “reasonable measures” requirement.  There are several things that businesses can do to increase the chances of protecting their trade secrets and preventing unauthorized disclosure of confidential information, including, but not limited to the following:

  • limiting access of any trade secret or proprietary information to the employees that need to know it to perform their job function;
  • develop or strengthen your company’s remote work policy, work from home policy and establish a remote desktop protocol (RDP)
  • password protect and/or track who has access to the trade secret information;
  • mark the information as confidential;
  • have employees sign confidentiality agreements such as non-disclosure agreements acknowledging that they will be provided with confidential information and are required to keep the confidential information safe not only during their employment, but also if it ends;
  • restrict employees to using only company issued devices when accessing the trade secret information (i.e. prohibit access from personal devices);
  • use passwords for participants in all video and/or web conferencing meetings if the protected information is likely to be shared and/or discussed; and
  • send a letter to employees at the end of their employment reminding them of their obligation to return all confidential information and not use it going forward.

Exercising diligence around the protection of intellectual property and trade secret information will demonstrate to a court that the company values the information and takes the matter seriously.

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