Klein & Wilson

What can you do when an ex-employee uses your trade secrets?

It can take companies years to develop the best processes or manufacturing tricks for their products. Whether you run a restaurant or a consulting company, your trade secrets include any proprietary information used by your company. Anything from a list of clients and customers to your exact manufacturing processes receive protection as trade secrets.

Unfortunately, some unscrupulous people may decide to use your hard-earned knowledge for their own benefit. It happens frequently enough that employees decide to leave companies and branch out on their own. Instead of trying to build their own business from the ground up, however, they steal your trade secrets to give them a leg up on you as the competition.

Generally speaking, your trade secrets are intellectual property

There are several different kinds of intellectual property, and many of them require you to file for protections with the federal government. However, trade secrets do not require that you file any documentation. Instead, trade secrets are typically protected as long as you can show that you use this information for business and that they provide an economic advantage to your company.

This is good news for the average business. Instead of needing to worry about whether or not you actually registered the stolen information, as long as you can prove that a former employee is using your proprietary information, you may have a case to defend your intellectual property in court.

Enforcing your trade secrets rights is an important step to protecting your business

Trade secrets confer an economic advantage to those who know them. In other words, this is information that your company utilizes in daily business practices. Whether a list of potential clients or a secret component in a product, the information helps you succeed and achieve greater profits than your competition.

When someone you hire and entrust with your company secrets violates that trust, you have the right to defend your business and your bottom line from that unscrupulous behavior. Failing to stand up for your company could have dramatic repercussions.

How trade secrets theft can impact your business

For example, if you have spent a decade building up a large business with a number of employees, someone with knowledge of your exact production process could replicate your company's product using cheap offshore labor. Effectively, your trade secrets could get used to make someone else rich. Your process could end up helping your former employee produce the same product at lower cost.

Similarly, if a former employee steals your client or customer list, he or she can go through that list and poach companies that you work with, one at a time. It takes businesses years to establish great relationships with suppliers and clients. If someone steals your client list and converts them into their clients, your company could see a steep decline in revenue.

Thankfully, so long as you have documentation of employing this person and his or her access to your trade secrets, you will have the option of pushing back. Filing an intellectual property lawsuit against someone who steals and uses your trade secrets for personal gain is an important step to protecting your business.

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