Keep a Secret - Its the Law
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Trade-secret law has become more important as our modern workforce has become
more mobile. The law is necessary to protect the owners of proprietary company
A trade secret is company information you have that's not readily available
to the general public. It's knowledge you've gained about what gives your
company a competitive advantage over other businesses within the industry.
Anything that makes a company unique or that a competitor would find valuable
in creating a competitive advantage may be considered a trade secret.
When changing employers, especially within the same industry, you need to
give some thought to the trade secrets that you posses.
A trade secret can take on many different forms such as the following:
- - Customer lists
- - Product formulas
- - Operational processes
- - Sales techniques
- - Pricing
- - Software
To determine what is or is not a trade secret, the following criteria must be
- the extent to which the information is known outside the company
- the amount of resources spent to create or develop the information
- the ease of duplicating the information
- the value of the information to the business owner and competitors
- how much effort is made within the company to keep the information secret
Many employers ask employees to sign an agreement called a Non-Disclosure
Agreement, or NDA, immediately upon hire. The purpose of these agreements is to
inform workers about what is considered a trade secret within the business.
An NDA specifically restricts the disclosure or use of trade secrets during
and after employment. But most U.S. states prohibit the misuse of trade secrets,
even if you did not sign a Non-Disclosure Agreement.
Unauthorized use or disclosure of an employer's trade secrets is unlawful in
most states during and after employment. So, even if you are fired from a job,
you can not disclose your former employer's trade secrets to competitors or to a
If a former employer can prove that an ex-employee's new job will lead him or
her to rely on their trade secrets, a court can enjoin the employee from working
for a competitor for a limited period of time.
One example is the case of a former PepsiCo employee who was privy to
confidential marketing plans for distribution and pricing of one of their drink
products, All Sport. He went to work for Quaker Oaks, who sold Gatorade.
A court found that the former employee would have to rely on PepsiCo trade
secrets and prohibited him from working at Quaker Oaks for 6 months.
The theft of trade secrets is a serious matter that carries the risk of civil
as well as criminal penalties.
Under the Economic Espionage Act, an individual can be prosecuted under
federal law with penalties of 15 years in prison and $500,000 in fines and
About the Author
Laura Adams is the host of the popular MBA Working Girl Podcast. The content
combines brainy business school theory with real-world business practice from
her career as a business owner, manager, consultant and trainer. Subscribe for
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Article Published/Sorted/Amended on Scopulus 2008-01-03 11:52:43 in Business Articles