How to Protect Your Proprietary and Confidential Information

While your business may not have “secret recipes” for its products and services, it almost certainly has some processes or information that it believes gives it a competitive advantage over others in the market. Your confidential information may include things like customer lists developed through substantial expense and effort, special product designs, pricing formulas, code, systems, business plans, or other inventions. In general, if the business takes certain steps to keep this information confidential, the law will help protect it from becoming public information and getting into the hands of competitors. On the other hand, if a business does not take the correct steps, your competitors are free to gain access to your information and use that information to their advantage.

Some of the steps necessary to protect your confidential information include:

  • Precisely identifying information that is confidential. The business must be able to specifically identify what the information is that it considers to be confidential. The more specific a business in identifying that information, the better chance it has of protecting it.
  • Not everything is confidential. Information that is generally known in the industry or is otherwise available in the public domain is not “confidential” and is not subject to protection under the law.
  • Clearly notify your employees what information is confidential and make sure they understand what is confidential.  The actual contents of the confidential information do not need to be revealed to the employees. In fact, only those employees that have a “need-to-know” the information should actually be given the contents of the confidential information.
  • Adopt a confidentiality policy and procedure(s). A company can help protect its confidential information by developing a confidentiality policy (typically included in an employee handbook) and procedure by which employees are required to handle, use, and/or disclose confidential information.
  • Require employees (and others) who internally access confidential information to sign confidentiality and non-disclosure agreements.
  • Mark tangible information as “confidential”.  Consider placing labels on confidential information that clearly states that the information is “confidential.”  This label can appear on the information itself and or on the container in which it is kept.
  • Conduct exit interviews.  Exit interviews can be a good tool to remind departing employees and consultants of their obligations to the company (including their continued obligations of confidentiality and non-disclosure or use of the confidential information).

These steps are some of the basic ways in which a business can protect its confidential information.  A competent corporate attorney can help you document and implement these policies, procedures, and agreements to assure that your competitors cannot (lawfully) use your confidential information to compete against you.

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