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A Judge’s Tips for Keeping Trade Secrets “Secret”

Just because information is sufficiently sensitive and valuable that it can qualify as a “trade secret” does not mean that it willqualify unless the owner of the information takes adequate steps to protect its secrecy.

In a recent decision, Judge John J. Tharp, Jr., of the U.S. District Court for the Northern District of Illinois explained that “there are two basic elements to the analysis” of whether information qualifies as a “trade secret”: (1) the information “must have been sufficiently secret to impart economic value because of its relative secrecy” and (2) the owner “must have made reasonable efforts to maintain the secrecy of the information” (internal quotation marks omitted).[1]

According to Judge Tharp, some of those “reasonable efforts” that a company can take to maintain the secrecy of its information include:

  • using non-disclosure and confidentiality agreements with employees;
  • enacting a policy regarding the confidentiality of business information that is more detailed than a mere “vague, generalized admonition about not discussing [company] business outside of work”;
  • training “employees as to their obligation to keep certain categories of information confidential”;
  • asking departing employees whether they possess any confidential company information, and, if they do, instructing them to return or delete it;
  • adequately training IT personnel about data security practices;
  • restricting access to sensitive information on a need-to-know basis; and
  • as appropriate, labelling documents “proprietary” or “confidential.”

As Judge Tharp made clear, companies that fail to institute reasonable measures to protect sensitive information do so at their own peril.

[1] Abrasic 90 Inc. v. Weldcote Metals, Inc., No. 1:18-cv-05376 (N.D. Ill. Mar. 3, 2019) at 11.

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About this Author

Peter Steinmeyer, Labor Attorney, Epstein Becker Law Firm
Member

PETER A. STEINMEYER is a Member of the Firm in the Labor and Employment practice of Epstein Becker Green and serves as the Chicago office Managing Shareholder. Practicing in all aspects of labor and employment law, he is also Co-Chair of the firm's Non-Competes, Unfair Competition and Trade Secrets Practice Group.

Mr. Steinmeyer advises clients on the enforcement and drafting of non-compete, non-solicitation, and employment agreements, litigates trade secret, non-compete, non-solicitation, raiding, and other restrictive covenant matters in...

312-499-1417
Erica McKinney, Epstein Becker, labor and employment lawyer
Associate

ERICA R. McKINNEY is an Associate in the Employment, Labor & Workforce Management practice, in the Chicago office of Epstein Becker Green.

Ms. McKinney:

  • Represents clients in labor and employment law litigation matters involving harassment, discrimination, retaliation, breach of employment contracts, and tort claims
  • Counsels clients on all aspects of compliance with federal, state, and local laws affecting labor and employment relations
  • Drafts employment agreements, severance agreements, settlement agreements, confidentiality agreements, and restrictive covenants

Before joining Epstein Becker Green, Ms. McKinney served as a law clerk to the Honorable Margaret B. Seymour of the U.S. District Court for the District of South Carolina and the Honorable Zoe Bush of the Superior Court of the District of Columbia.

312-499-1401