When Should a Business Speak to a Trade Secrets Lawyer?

A business can spend years developing information that gives it an advantage over competitors. Customer databases, pricing models, manufacturing processes, software methods and internal strategies may all have commercial value. When that information is exposed, copied or taken by someone outside the business, speaking with a trade secrets lawyer can help determine what protections may be available and what action should be considered.

Legal issues affecting businesses can extend well beyond confidential information. A company may also encounter unrelated property and commercial matters, such as a stamp duty objection, where understanding procedural requirements and obtaining timely legal advice can be important. While these matters involve different areas of law, both demonstrate why businesses should avoid making significant legal decisions without first understanding their obligations and options.

What Actually Counts as a Trade Secret?

Not every piece of business information automatically qualifies as a trade secret.

The commercial importance of information generally depends on its nature, how confidential it is, and the measures taken by the business to protect it. Information that is freely available to the public is unlikely to have the same level of protection as proprietary information kept within a restricted business environment.

Examples of potentially valuable confidential information may include:

• Proprietary production processes
• Non-public pricing structures
• Customer and supplier information
• Business strategies
• Technical methods and specifications
• Unpublished product development information

The exact legal position depends on the circumstances and the information involved.

The Employee Exit Problem

One of the most sensitive periods for confidential information is when an employee leaves a business.

Employees may have had legitimate access to commercially sensitive material during their employment. Problems can arise if information is copied, retained or disclosed after their employment ends.

This is why businesses often benefit from addressing confidentiality and intellectual property obligations before a dispute develops.

Consider a Simple Scenario

A senior employee resigns on Friday.

By Monday, the employee has joined a direct competitor.

During the previous week, the employee downloaded several internal documents, including customer information and product development files.

The business now has several questions:

What was downloaded?

Was the information confidential?

Has it been shared?

What contractual obligations applied to the employee?

What can the business legally do now?

These questions are difficult to answer effectively without first establishing the facts. Acting impulsively can also create additional legal complications.

Don't Forget the Preventative Side

Trade secret protection isn't only about responding to suspected misuse.

Businesses can also take a proactive approach by establishing appropriate confidentiality arrangements, limiting access to sensitive information and making sure employees understand their responsibilities.

Good internal processes can make it easier to identify sensitive information and demonstrate that the business takes confidentiality seriously.

When Should the Phone Call Happen?

There isn't one specific moment when every business should seek legal advice. However, certain situations should prompt closer attention:

1. A key employee is leaving for a competitor.
2. Confidential files appear to have been copied or accessed unexpectedly.
3. A former employee continues to possess business information.
4. A competitor appears to be using information that should not be publicly available.
5. A business is preparing agreements involving highly confidential information.

If your business suspects that confidential information has been misused, or you want to strengthen the way sensitive information is protected, obtaining professional legal advice can be an important step towards protecting your commercial interests.