Madathil Law Office regularly advises Nebraska businesses regarding issues that come up for them. Start-up companies, and any company with technology or secret information, have a few unique issues that must be addressed.
Our firm is hoping to educate the Nebraska business community about these issues with a series of posts. You can read the first post in the series here, where we discussed documenting joint ventures and other agreements.
The second post in the series is dedicated to advising Nebraska businesses that they must protect their trade secrets. A trade secret may include any information, process or technology that provides economic value to the secret holder that is not readily known to others. Trade secrets are different from patents in part because they are broader and must be kept secret. Virtually every startup will have many valuable trade secrets which may or may not someday be patented.
Each Nebraska company needs to take steps to internally identify its trade secrets. The chief technology or legal officer should encourage employees to identify and document the company's key trade secrets.
Once documented, you should take reasonable measures to protect the trade secrets, including:
(1) limiting employee and third party access,
(2) marking key documents and electronic files as confidential,
(3) and requiring special password protection.
Employees should sign an employment agreement mandating that company secrets be used only for company business. The same language protecting trade secrets should also be included in joint venture agreements with other companies and third parties.
When employees leave the company, they (and often their new employer) should be advised of the prohibition on using the company's trade secrets at their next job. If there's any suspicion of improper use of the trade secrets, segregate the former employee's computer and files, and hire a forensics expert to investigate the situation. Engage in defensive hiring. Make sure new employees understand they are being hired for their brainpower and skill, not to obtain trade secrets from former employers. Startups are often damaged -- sometimes irreparably -- by over-zealous employees who believe they need to shortcut the development process by using confidential, trade secret information from their former jobs.
Our firm is hoping to educate the Nebraska business community about these issues with a series of posts. You can read the first post in the series here, where we discussed documenting joint ventures and other agreements.
The second post in the series is dedicated to advising Nebraska businesses that they must protect their trade secrets. A trade secret may include any information, process or technology that provides economic value to the secret holder that is not readily known to others. Trade secrets are different from patents in part because they are broader and must be kept secret. Virtually every startup will have many valuable trade secrets which may or may not someday be patented.
Each Nebraska company needs to take steps to internally identify its trade secrets. The chief technology or legal officer should encourage employees to identify and document the company's key trade secrets.
Once documented, you should take reasonable measures to protect the trade secrets, including:
(1) limiting employee and third party access,
(2) marking key documents and electronic files as confidential,
(3) and requiring special password protection.
Actions To Take with Employees
Employees should sign an employment agreement mandating that company secrets be used only for company business. The same language protecting trade secrets should also be included in joint venture agreements with other companies and third parties.
When employees leave the company, they (and often their new employer) should be advised of the prohibition on using the company's trade secrets at their next job. If there's any suspicion of improper use of the trade secrets, segregate the former employee's computer and files, and hire a forensics expert to investigate the situation. Engage in defensive hiring. Make sure new employees understand they are being hired for their brainpower and skill, not to obtain trade secrets from former employers. Startups are often damaged -- sometimes irreparably -- by over-zealous employees who believe they need to shortcut the development process by using confidential, trade secret information from their former jobs.
For example, in 2006, a former IBM employee sent his new bosses at HP a confidential IBM memorandum containing trade secret business plans and technology. HP was forced to fire the new employee, report the incident to IBM and federal agents, and cooperate with a multi-year federal investigation and prosecution of the pilfering employee.
—Don't let this happen to your Nebraska company. Make it clear to new employees that they should not bring confidential materials or information from previous jobs with them, nor should they use trade secrets of their prior employer.
—Don't let this happen to your Nebraska company. Make it clear to new employees that they should not bring confidential materials or information from previous jobs with them, nor should they use trade secrets of their prior employer.
If you are a Nebraska small business owner, or a person in Nebraska creating a start-up Company, contact Madathil Law Office for a free consultation regarding what kind of entity you should form, and for guidance on many legal issues you will face.
Angela Y. Madathil
Madathil Law Office, LLC
Employment and Business Law
Serving clients in Omaha and Lincoln
In Omaha In Lincoln
1625 Farnam Street #830 285 South 68th Street Place, Suite 322
Omaha, NE 68102 Lincoln, NE 68510
T: 402.577.0686
F: 402.415.0635
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