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What should one consider when choosing appropriate notice measures?

Pay attention to clarity and regularity of the communications. Don't assume all your employees have a memory as good as your own. Too much assertion of confidentiality is better than not enough. Excessive assertions will indicate that confidentiality is extremely important to the company. Choose procedures that will be easy to show to a court (i.e., leave a paper trail wherever possible). Remember the jury that wanted the employer to clearly express to the employee the manner in which the employee was to behave. And finally, don't overlook providing notice to non-employees.

What notice procedures may be used?

Any communication that identifies either what information is confidential or how to handle confidential information will work as a notice measure. Employee handbooks, newsletters, and signs are common examples. These communications do not need to be cold or stale, but may be dressed up in the form of Thank Yous, Slogans, or even graphically presented. Creativity in the mode or manner of expression does not need to be suppressed and may improve the ability of the listener to remember.

The number and types of procedures are limitless. The goal here is to express to everyone orally, in writing, through actions, and any other methods of communication which information is to be confidential. Choose those procedures which are most easily assimilated into your business. Not all procedures are necessary, since two or three carefully chosen procedures may be enough. Several specific examples are discussed below.


How should one use non-disclosure agreements?

Non-disclosure agreements should be signed before a person sees, hears or otherwise learns confidential information of the company. In the case of a new employee, the agreement should be signed before the first day of work. If they sign after they start working or otherwise obtain access to the information, they should be given something of value in exchange for their signature (this may be necessary to make the contract binding). The agreement may contain, in addition to a non-disclosure provision, a provision requiring the employee to not compete with the employer for a period of time following the termination of employment. Non-disclosure agreements are not used with just employees, but rather anyone who has access to the confidential information.

A distinction needs to be made between agreements which have been read and those which have not. An agreement that has not been read may provide contract rights, but does not provide significant notice value. Agreements in Minnesota may also need to specify specific types of information that needs to remain confidential. Vague contracts provide little, if any, notice. Consider agreements for everyone who may have contact with sensitive information. Give the signer of the agreement a copy and place the other in the file.

Signed contracts, along with audits, are perhaps the most powerful tools in trade secret law. Beyond notice, contracts can be used to broaden the trade secret holder's rights and provide basis for asserting misappropriation (i.e., breach of contract). A well prepared non-disclosure/ non-compete contract is a must. Court's seem to decide for trade secret holder's in the presence of a contract and against the holder in the absence of a contract.

Should the company formally adopt a confidentiality policy?

The company should adopt a statement of policy. The policy may provide that: "information not generally known or readily ascertainable that would have value if it was secret will be maintained secret absent a greater need to the contrary. All situations where there is doubt as to how to treat particular information will be construed in favor of treating the information as secret. The company will determine those times when such information will not be treated confidential on a case-by-case basis." This or a similar statement should be adopted by the company.

How should documents be marked?

Most computer systems will automatically print "confidential" on each page once properly programmed. A rubber stamp stating "confidential" can be placed on each person's desk that commonly sees confidential material. Consider the use of red ink with such a stamp. A clear marking of "confidential" on a document provides very good notice.

How can one use positive and negative reinforcement?

Oral and written admonishments and instruction should be used with persons not properly following confidentiality procedures. More serious sanctions should be applied when the infractions are more serious.

Rewards may be given out to those who find actual and potential information leaks. This may include a reward for blowing the whistle on others failing to follow confidentiality procedures. Employees often have a better understanding on the particulars of how information is treated in the company than management. Reward the sharing of their knowledge.

How can one use written acknowledgments?

Memorandums expressing the need to treat information confidentially and requiring an acknowledgment by the employee's signature should be regularly distributed. The memorandums should include a statement that the employee recognizes and will follow the company's confidentiality procedures. The more the memorandum explains the procedures and identifies the protected information, the greater the value of the memorandum. The signature can be used to verify that all employees have signed and returned the memorandum. Provide a copy to the signer and keep the original in the file.

What should be done at meetings?

Meetings should regularly include a statement regarding confidentiality. You might wish to mention that specific information on the company is not to be given out or ask if anyone is aware of potential leaks. You may wish to have counsel speak to your employees at such a meeting.

When should discussions be held with individual persons?

At minimum, discussions about confidentiality should be held at the beginning of the relationship, periodically throughout, e.g. annual reviews, when a problem occurs, and at the termination of the relationship. Each discussion may include a signed statement that the confidentiality procedures were clearly explained to them, that they will follow the procedures, that they will return all information to the company when they no longer need it for the business with the company and that if they ever desire to disclose or use information that might be confidential they will request the company's permission first.

About the Author:

N. Paul Friederichs, founder, started practice as a patent attorney in 1992 at a major Minneapolis, Minnesota law firm where he was the highest performing associate. In 1993, he started and developed Friederichs Law Firm with his father. Throughout this time Paul�s experience was heavily weighted toward litigation. He served such clients as Tonka Toys, American Harvest and Boston Medical.

He can be reached at http://www.angenehm.com/

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