Growing environment breeds new risks, emerging trends in business litigation

Posted by Charles Middleton on 08/31/2018

Q: While claims of misappropriation of trade secrets and improper solicitation have been growing for a while, low unemployment and increasing movement of individuals or groups of employees to competitors is fueling an explosion of these claims. How should one protect their business from being solicited?

A: You can protect your business by first assessing and understanding what secrets your company has and how they can be protected. Develop policies and procedures to protect those secrets and do not forget to make sure those policies are actually being followed. Create specific provisions for employment agreements that consider and cover secrets, non-solicitation and business issues specific to your company and industry. Finally, if misappropriation of trade secrets or solicitation occurs, act quickly to get an injunction or other legal process to minimize the harm.

Q: Former employees also may use one's confidential customer lists, pricing information or other trade secrets to solicit customers for their new employer. What strategies should be implemented to safeguard against this practice?

A: It's important to counsel any new employee coming from a competitor not to disclose any trade secrets from their previous employer. Your policies and procedures should cover both protecting your secrets and avoiding liability from receiving another company's secrets. Some companies attempted to prevent employees from jumping to competitors by entering into “no-poach” agreements with other companies under which they agreed not to hire each other's employees. That cure is worse than the disease, however, as both the U.S. Department of Justice and the Federal Trade Commission recently stated that companies using such agreements will be prosecuted criminally.

Q: Nearly every type of industry and business is collecting more types and volumes of data on everything and everyone, including vendors, customers and employees. As companies use this vast array of data to enhance products and services, they are also exposing themselves to new liability. How can a business shield itself from the legal consequences of misappropriated big data?

A: It's not just a data breach that should concern businesses, although that is a real risk of exposure. As companies have more data and use analytics on that data, they also are being held more accountable when things go wrong. Where once it was reasonable for a business to not know of an issue, risk or defect in a product or service, data is changing that presumption. Now regulatory agencies and courts are increasingly finding that data available to your company gave you knowledge upon which you could and should have acted. Therefore, businesses need to consider not just the upside of all that data being collected, but carefully analyze what data it has, what uses it makes of it and what risks are being created by it. Well-considered policies and compliance programs are a must. Because of the rapidly changing and evolving nature of data, data collection and uses, you must continue to monitor and adjust to keep pace with change.


Published The Oklahoman, August 30, 2018