Previously in our Intellectual Property (IP) Best Practices series, we introduced step four to managing your IP: code of conduct. Please check back every Monday for the next step in this series.

Piles of rolled documents containing sensitive information and intellectual property

Some information is best kept limited to certain key employees. The more employees that have access to intellectual property (IP), the higher the probability that such information may be disclosed. This not only reduces the likelihood of leaks but also factors in favor of protecting IP for purposes of trade secrets. We understand that some confidential information has to be shared in order for the business to run, especially in the context of startups where most team members wear multiple hats. But as much discretion can be employed, should. For example, it is unnecessary to discuss the specifics of the venture capital funding your business is receiving to a contractor hired to build your website.

Trade secrets are guarded information that give a business a distinct competitive advantage by the very virtue of being hidden from the world at large. To be afforded protection as a trade secret the business is required to satisfy three conditions. Firstly, the information should not be public knowledge or known by others in the same market. Secondly, the information should have some commercial value. And lastly, the business must take reasonable steps to ensure the information is kept confidential. The biggest advantage of a trade secret is that it is perpetual and if protected well, need never be disclosed and used by other people (unlike other forms of IP protection).

Despite strict IP protection mechanisms in place, employees may attempt to steal IP either out of malice or actually believing they are the rightful owners. The easiest way to make sure business IP is not misappropriated is by building employee loyalty. If an employee is loyal, the likelihood of being bought out by competing businesses will decrease. Information is power and companies in intellectual property driven industries are always on the prowl to poach employees to get their hands on confidential information that will destroy a competitive advantage the other company possessed. This problem is twofold amongst small to medium sized businesses and entrepreneurs as there is only so much they can pay employees. Large companies can easily tempt them with huge payoffs and job offers, ruining an up and coming business before it becomes big.

Startups and small to medium businesses tend to restructure and have a number of employees that work for short periods of time before moving on to other projects. It is important to understand what future the employee has at the business, if employed only for a project or the migrating type then limiting access to sensitive information is smart. Employment confidentiality contracts are not infallible and it is always better to be cautious. Unlike the past, in today’s economy there is high employment mobility and limiting access to sensitive information is advisable. Input mutual confidentiality and non-compete clauses into all employment contracts. This will help legally prevent ex-employees from divulging sensitive information. But such covenants are limited by duration and geographical location which eventually expire. The judiciary has a general dislike for restrictive covenants in general so it is best to limit reliance on them.

The next step to maximizing your IP Strategy is Agreements. For more information on intellectual property check out Traklight’s resources and fill out the risk quiz today.

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