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TRADE SECRETS LOST

Writer's picture: Paul Peter Nicolai Paul Peter Nicolai

An employer’s complaint under the Defend Trade Secrets Act and the Massachusetts Uniform Trade Secrets Law was dismissed because the files copied by the defendants were not reasonably protected as trade secrets.

 

Neither employee signed non-competition, non-solicitation, or confidentiality agreements when they began employment. They were not told of any confidentiality policies at any point during their employment. The employer did not require employees to enter into confidentiality agreements or inform them to keep any files confidential.


The other precautions taken were minimal. All employees had login credentials and access to the company’s storage account. All employees could log onto mail using a shared password. Password protection, standing alone, is not enough.

 

WHY THIS IS IMPORTANT… Trade secret law has always required the owner take adequate steps to preserve the confidentiality of the trade secret.


This case is vital in two ways. First, the new federal and state laws on trade secret protection do not change the common law standard requiring adequate protection. Second, it is becoming more evident that simply putting passwords on systems will not meet the standard.

 

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