USA Law and Practice Contributed by: Claudia Ray, Joseph Loy, Josh Berlowitz and Andrew (Keum Yong) Lee, Kirkland & Ellis LLP
3. Preventing Trade Secret Misappropriation 3.1 Best Practices for Safeguarding Trade Secrets Common approaches for safeguarding trade secrets include physical, technological and personnel-related means, as follows. • Physical steps: (a) building access controls; (b) ID security check; (c) security guard monitoring; (d) visitor logs; (e) supervised tours; and (f) labelling confidential information. • Technological protection: (a) dedicated VPN networks; (b) password protection; (f) spam and phishing email filters; and (g) mobile device management software. • Personnel: (a) pre-employment screening including determin - ing whether new hires are subject to any non- compete agreements; (b) training; (c) employee handbook that describes the policies on confidentiality and trade secrets; and (d) non-disclosure agreements for each new hire, visitor and third-party vendor/consultant. 3.2 Exit Interviews It can be useful for an employer to conduct exit inter - views of departing employees. Such interviews often incorporate some or all of the following: • reminding the employee not to disclose any trade secret information; • reminding the employee to return all company property, including badges, access cards and elec - tronic devices such as laptops or cell phones; • asking the employee about the nature of their new position, such as any responsibilities, the name of the new employer and the new employer’s address (c) multifactor authentication; (d) access and security audits; (e) penetration testing;
2.3 Joint Ventures Entities that participate in a joint venture owe each other a fiduciary duty not to disclose their trade secret during the joint venture. Nevertheless, it is best prac - tice to create a contract between the owners of the joint venture that requires them to maintain the secre - cy of the trade secret both during the joint venture and after its dissolution. Alternatively, a joint venture might involve a company licensing its trade secret to a third-party company. Again, in this scenario, it is best practice for the company with the trade secret to require the third party to sign a contract stating that the third party will not disclose the company’s trade secret, rather than relying on any implied duty of confidentiality. 2.4 Industrial Espionage When a company possesses valuable confidential information, industrial espionage is a likely threat. Companies should take as many security measures as practically feasible to restrict access to trade secrets and confidential information. Even internally, the trade secrets should only be available to a limited number of need-to-know employees, and those employees should frequently be reminded of the confidential nature of the trade secret and be required to sign non- disclosure agreements. If an individual commits an act of industrial espionage, they may be subject to criminal prosecution under the EEA (18 USC Sections 1831–1839), which provides a cause of action against domestic and foreign misap - propriation of trade secrets. The Federal Bureau of Investigation’s Economic Espi - onage Unit can investigate instances of trade secret theft. There are dedicated units in the US Attorney’s Offices that have the ability to prosecute trade secret espionage.
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