New Challenges in Trade Secret Protection for Companies Adopting Work from Home

One of the many changes we saw in 2020 was the rise of working from home. The rapid rise of this transition to remote working brought with it new challenges for businesses managing their confidential information. Disruption to normal procedures have presented heightened risks of disclosure and businesses must find ways to adapt to these new challenges if they hope to maintain the commercial value of their confidential information both now and once we return to a more normal state.

One principal form of confidential information that companies seek to protect is trade secrets. Unlike many other forms of intellectual property, the existence and perpetuity of a trade secret depends on its being kept a secret. In fact, the continued protection of trade secrets under the laws of many jurisdictions require the owner to show that it has taken reasonable steps under the circumstances to protect the secrecy of the information.

Employees most commonly have access to a company’s trade secrets in the form of data. While the physical location of where an employee interacts with this data (i.e. at the office or at home) may have little impact on how the employee handles such data, working remotely has the potential to exacerbate the number of risks faced by a company including risks such as:

  • The proliferation of copies of trade secrets (authorized or otherwise);
  • An inability to track the location or storage of or apply an adequate level of security to these copies;
  • Unintentional disclosure of these copies due to information being accessed and stored over an employee’s public or unsecured network;
  • Inadvertent disclosure to others due as a result of failing to effectively dispose of confidential information;
  • Less visibility over communications from employees to third parties;
  • The relaxation of data security policies not created with remote working in mind or inadequate to accommodate remote working;
  • The handling of confidential information on non-work issued devices that may lack the normal security controls employed by a company’s IT department; and
  • Greater reliance on email and its inherent risk of phishing and spam.

As employees take on an increasing role as gatekeepers and protectors of trade secrets, the education of employees and provision of regular reminders of policies surrounding the handling and disclosing of trade secrets are vital first steps to maintaining the secrecy of confidential information. An important correlate is the clarity of policies and categorization of trade secrets.

To mitigate the risk of disclosure and ensure legal protection for trade secrets while employees are working remotely, companies should consider doing the following:

  • Ensuring all trade secret information is clearly labeled as confidential, with regular reminders to the workforce about how to identify, use, and protect this information.
  • Reviewing and updating confidentiality agreements to ensure that any employee or outside party with access to trade secrets are subject to a nondisclosure agreement.
  • Using and regularly updating appropriate levels of data encryption and system security, particularly on systems that can be remotely accessed by employees who work from home;
  • Limiting access of trade secrets to only those who can demonstrate a need for access;
  • Restricting copying/printing for certain files containing trade secrets;
  • Using remote download monitoring software for files or folders containing trade secrets;
  • Appointing an executive-level gatekeeper responsible for making case-by-case decisions relating to requests for access to certain confidential information;
  • Investing in secure, enterprise-level virtual private network (VPN) software to overcome network security or privacy issues that may arise from home network connections; and
  • Using secure document exchange systems rather than emails.

Importantly, companies must understand that these policies cannot be set-it-and forget-it policies. Trade secret owners should revisit and upgrade existing policies as they continue to refine their remote work policies. They should then commit to regularly reviewing these policies and adjusting them as necessary with an eye to both the past experiences and foreseeable circumstances. The implementation and regular review of these trade secret protection policies can significantly bolster protection of a company’s trade secrets.

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