Hiring Competitor’s Top Talent & Being Fiercely Competitive Without Exposing Your Company

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On Wednesday, January 23, Knobbe Martens Partners Jeff Van Hoosear, Susan Natland, Diane Reed and Lynda Zadra-Symes participated in the Association of Corporate Counsel (ACC) - Southern California In-House Counsel Conference. This all day CLE program was just for in-house counsel and panels included: Social Media & Privacy; New Developments in California Employment Law; Lawful Interception; Millennial Engagement in the Workplace; and Helping Sales & Marketing Avoid Defamation/Unfair Competition.

Text of Hiring Competitor’s Top Talent & Being Fiercely Competitive Without Exposing Your Company

  • 1. Swimming With Piranhas: Hiring Competitors Top Talent & Being Fiercely Competitive Without Exposing Your Company Avoiding Trade Secret Misappropriation, False Advertising & Unfair Competition Claims January 23, 2013 Los Angeles, California Moderator: Harrison Perla, Esq. Panelists: Lynda Zadra-Symes, Jeff Van Hoosear, Susan Natland and Diane Reed @KnobbeMartens at TwitterThe recipient may only view this work. No other right or license is granted. #IHCC12 #IHCC13 2013 ACC-SoCal In-House Counsel Conference
  • 2. Via Federal ExpressDear President:I am General Counsel for Fierce Competitor, LLC. (FCL). It has come to my attention that your company has recently hired Pat ONeil Riley, a former V.P. of Sales and & Marketing at FCL. Given Pats position at FCL, Pat had access to a variety of confidential and proprietary information. Whatever Pat knows clearly qualifies as a TRADE SECRET of FCL andshould not be used by your company We demand that you cease and desist from the use and disclosure of all information and data that Patobtained while a V.P. at FCL We further demand your immediate confirmation that your company will not use or disclose anyTRADE SECRETS or proprietary information of FCL Unless I have your immediate confirmation by the close of business yesterday, FCL will proceed toenforce all legal remedies available to it, including, false advertising, unfair competition, trade libel,as well as all other remedies that our outside counsel have not yet even thought of I expect to hear from you by yesterday. Have a nice day.Sincerely, General Counsel 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_2 2
  • 3. What is your next step? 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_3 3
  • 4. Understanding Trade Secrets: Protection and MisappropriationTrade Secret DefinitionMarking ConfidentialNDAsAvoiding Liability 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_4 4
  • 5. What is a Trade Secret?Trade secret is a legal term for knowledge, or information that is confidential or secretAnother term that you may sometimes hear is confidential or proprietary informationThese terms are more or less synonymous: Trade secrets Proprietary information Confidential information 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_5 5
  • 6. Laws governing the protection of trade secretsIn the U.S., the protection of trade secrets is governed by state lawTrade secret laws vary from state to stateThere is no U.S. or federal system for recognizing trade secretsSome foreign countries have laws to protect trade secrets, but those laws vary from country to country (so governing law is important)Some foreign countries do not even recognize trade secrets as a form of IP 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_6 6
  • 7. What are the legal requirements to protect trade secrets?Generally, the law will recognize and protect a trade secret if it constitutes information that: Is not generally known (i.e., it is secret or confidential) Has value to you or would have value to a competitor Is subject to reasonable efforts/procedures to preserve its confidentialityConversely, if the information is publicly available or otherwise falls into the public domain, it is not protectable as a trade secret 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_7 7
  • 8. What kind of information can be protected?Almost anything!Business information Financial data Sales data Customer or vendor data Operational information Branding information Advertising and marketing data Prospective products, services, or programs 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_8 8
  • 9. What kind of information can be protected?Technical, engineering, testing or scientific information or dataComputer software and related documentationManufacturing processes or methodologiesRecipes, formulas or instructionsThe law tends to favor technical information over business information so be especially careful with protecting business information to preserve its trade secret status 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_9 9
  • 10. Do you need to file or register anything to protect a trade secret?There is no legal system for registration of a trade secretWhether information qualifies as a trade secret is based on a good faith belief that it meets the requirementsThere are important procedures for preserving a trade secret as a protectable assetIt is fairly easy to lose trade secret status 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_10 10
  • 11. How do I protect a trade secret?The most important things to do: TREAT THE INFORMATION IN A CONFIDENTIAL MANNER Clearly label or designate the information as confidential or proprietary Maintain the information in a locked or secure location that cannot be accessed without appropriate authorization Limit access to the information only to those within the company who need to know it 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_# 090701_11 11
  • 12. How do I protect a trade secret? Do not publish or distribute the information to the public Use appropriate agreements with confidentiality clauses Monitor or audit compliance on a regular basis to ensure (and demons