11 Tips for Preempting Business Pirates

Business piracy, e.g., the unauthorized use of intellectual property,  is a problem that causes major losses for businesses each year. As technological complexity increases, and industry becomes more and more competitive, the temptation for the unscrupulous to gain a competitive edge also increases.

Business piracy, e.g., the unauthorized use of intellectual property, is a problem that causes major losses for businesses each year. As technological complexity increases, and industry becomes more and more competitive, the temptation for the unscrupulous to gain a competitive edge also increases.

Problems arising from business piracy are so varied and complex that it would be impossible to devise a checklist to protect every business against every conceivable form of business piracy, but the following can help minimize the dangers of piracy:

  1. Include valid partial restraints and a severability provision in contracts with key employees.
  2. Don’t give vendors unlimited access to trade secrets; consider using written agreements protecting the company from unauthorized disclosure.
  3. Use contractual safeguards to protect trade secrets from customers who work closely with the company and who necessarily require access to trade secrets.
  4. Use strict procedures in dealing with licensees when trade secrets and other confidential processes are involved. Describe the company’s proprietary interest in detail. If a licensee is going to copy a document, provide for their return when the license expires.
  5. Keep detailed minutes for all meetings, identifying both the people present and the information disclosed.
  6. Keep records of those in the company with knowledge of its trade secrets. Maintain strict check-in and check-out procedures for clearly marked confidential information.
  7. Inform employees of the company’s practices and policies on confidentiality of trade secrets and include them in company manuals and employment agreements.
  8. Consider carefully what motivates employees, e.g., low wages and meager benefits may make company employees easy prey to competitors.
  9. Keep portions of the plant concerned with trade secrets and confidential matters secure from all visitors.
  10. Divide knowledge of the trade secrets and confidential processes among as many key employees as possible to minimize the number of people with complete knowledge.
  11. To the extent legally permissible, have supplies purchased for confidential processes delivered in containers marked in code.

If piracy occurs despite these safeguards, at least the company will have a valuable set of records for litigation purposes; the documentation will eliminate many problems of proof at trial and may greatly enhance the client’s chances for a favorable judgment.

On March 4th in Los Angeles and March 11th in San Francisco, you can attend a program on Trade Secret Litigation in California: Current Issues and Cutting Edge Strategies, which will be available On Demand beginning March 23rd. For complete coverage of unfair competition and trade secrets, go to CEB’s practice guide California Business Litigation. Also check out CEB’s practice guide Trade Secrets Practice in California.

© The Regents of the University of California, 2011. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

3 Responses

  1. Very strict these eleven points, but also very good in today’s business world. Thank you for your article

Add your comment to the blog post

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: