Lesson 4: Practical Measures for Protecting Confidential Information/Trade Secrets

Take reasonable measures to guard the secret, but what is considered reasonable will vary, depending on the circumstances.

Establishing minimal levels of protection will likely result in the confidentiality being lost and, with it, your legal entitlement. Too much protection may be cumbersome and costly and may stifle the creative use of the confidential information/trade secrets.

The goal should be to take strong, proactive measures to protect your sensitive information as it demonstrates to a court that the information is valuable to you and you are serious about protecting it. A court will therefore be more likely to protect you against disclosure and misuse.

We will illustrate what reasonable protections may look like in the context of each of the scenarios below.

Scenario 1: Carelessness

The CEO of Acme goes to meet with ABC Inc., with whom she hopes to partner, to discuss a secret new method for manufacturing a particular drug. When she registers with the front desk and fills out ABC Inc.’s extensive security questionnaire, she leaves a folder with information detailing the secret method, labelled “Confidential Information,” in plain sight in the reception area. The reception area has other people sitting there, and the folder is out of her sight.

Yes, she has. This is an example in which the CEO’s inadvertence might result in the document being accessed, leaving the company open to an argument that reasonable care was not taken to protect the information. In other words, let’s say that a competitor were to learn of the fact that the CEO left the information unattended for a period of time in a public place. The competitor could then argue that Acme should not be entitled to confidential information/trade secret protection because it didn’t exercise reasonable care in ensuring the secrecy of the information.
She should have avoided taking the file with her in the first place or, at the very least, she should have made sure that she had it with her at all times, ideally in a locked briefcase.

Scenario 2: Open Offices


Acme has recently moved into a building where one of its competitors offices is on the same floor. Acme has always had an open-door policy, so it encourages people to work in an open space rather than in separate offices. The result is that people leave their materials on their desks and tend to have conversations at their desks. These conversations can be easily overheard, even outside Acme’s premises.

Yes, because the open-door policy can facilitate unauthorized access to confidential/trade secret information.
Acme should implement security measures that could include:

  • physically restricting access to the locations where confidential/trade secret information is stored and using encryption or passwords to protect the security of the information;
  • implementing physical protections such as installing security cameras and having closed-off rooms where confidential discussions can take place;
  • marking documents and other media that contain confidential information/trade secrets with a conspicuous label such as Confidential/Proprietary, which is helpful to remind parties who have access to these materials about their obligations to protect the materials secrecy; and
  • using code names so that people can refer to something without disclosing details about it, which also reinforces for people the secrecy associated with the information that is the subject of the code name.
However, in shaping its confidentiality protocols, Acme might also consider some of the benefits that might accrue from maintaining some aspects of its open-door policy. Open exchanges between employees can sometimes stimulate innovation and new ideas, which, in turn, can generate even more valuable IP.
Last modified: Friday, 4 September 2020, 10:43 AM