Reminder, Information is Not a Trade Secret if you do not keep it Secret!

We have posted in the past about the definition of “trade secret” and what an employer must show when seeking to protect “trade secrets from theft by former employees. Under Oregon law, a trade secret means information that (i) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. A recent case out of Illinois provides an excellent guide to all of the ways an employer can fail to make an effort to maintain the secrecy of its information.

In Abrasic 90, Inc. v. Weldcote Metals, Inc., a former employer sought an injunction to stop a group of employees who left to join a competing business from taking (and using) the former employer’s “trade secrets.”  The Court found that the former employer could not show that it had any trade secrets because it “took almost no measures to safeguard the information” and because of the company’s “almost total failure to adopt even fundamental and routine safeguards. ”

The Court identified the following as the company’s failures to protect its information:

  • Failure to require employees with access to information to sign NDAs
  • Failure to adopt/distribute a policy concerning the confidentiality of the company’s business information
  • Failure to train or instruct employees as to their obligation to keep information confidential
  • Failure to require third-parties to sign NDAs
  • Failure to collect/recover information from departing employees or to tell them to delete any information in their possession
  • Failure to adopt any data security practices
  • Failure to limit access to particular employees
  • Allowing employees to use the same password to access the shared drive containing  information
  • Failure to encrypt information
  • Failure to restrict employees’ ability to print, copy, email information
  • Failure to segregate allegedly confidential trade secret information from public/non-confidential information

Based on these failures, the Court found that the former employer was not entitled to an injunction because it was not likely to prevail on its misappropriation claim (on the grounds that it could not show it had any trade secrets worthy of protection).  ABRASIC 90 INC. v. WELDCOTE METALS, INC., Dist. Court, ND Illinois 2019 – Google Scholar

Since Oregon and Illinois define “trade secret” similarly, this case is an excellent reminder of the steps an employer should take to ensure that valuable information can be characterized a “trade secret” and protected in the event of misappropriation.

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