Businesses need to recognize that today’s workforce is mobile and that competitors often seek to increase market share by hiring away employees that possess and will disclose confidential information to their new employer. This is particularly true when the economy has bottomed out and is on an upswing. It may be too late to protect your business after a key employee defects to a competitor taking a substantial portion of your business.
There are a number of different strategies a business can employ to protect its business information. One is to use a non-disclosure agreement. A proper NDA should protect the confidentiality of your proprietary information; alert employees to the existence and importance of such information; discourage employees from using, selling or disclosing the information after their employment; and seek compensation when such information is wrongfully taken. While the Illinois Trade Secret Act provides some protection, relying on it alone is insufficient. Having employees sign an NDA when hired or promoted is generally enforceable in Illinois, so long as the agreement is reasonable in scope, duration and geographic area. A properly drawn agreement focuses on those employees who have access to the proprietary and confidential information, clearly describes the information it seeks to protect, imposes a reasonable restriction on its use and disclosure, and provides for appropriate remedies in the event of a breach. The existence of such agreements reminds your honest employees of their obligations and warns those who are not of the risk of wrongfully using and disclosing your business’ proprietary and confidential information.
An NDA should be tailored to your specific business and its needs, and should be vigorously and quickly enforced. The need to protect your business’ information and the provisions of the NDA should be discussed with employees when they are asked to sign it and again in their exit interview. Annual signings are not necessary, but when an employee is moved or promoted to a different position where he may have access to more sensitive proprietary and confidential information or trade secrets, a resigning or the execution of a modified NDA with greater restrictions may be appropriate.
A nondisclosure agreement alone will not protect your business from the theft of proprietary and confidential information, but should be used in conjunction with other reasonable methods to maintain the confidentiality of such information and prevent its unwarranted disclosure. Those methods vary by business size and type, and can be as simple as restricting access to certain computer files by password, using locked file drawers and file rooms, or restricting and recording photocopying privileges.
At Brooks, Tarulis & Tibble, LLC we have experience in counseling and advising employers on methods to protect their confidential and proprietary information of a competitively sensitive nature and trade secrets. We can also assist you in obtaining trademark, copyright or other protections of intellectual property and other non-tangible assets. If we can provide you with further assistance in this matter, please contact us.