Published by the Daily Journal of Commerce March 2018
Businesses often seek to use litigation to stop a former employee (and his or her new employer) from using information that they consider confidential. Emergency relief in the form of temporary restraining orders and preliminary injunctions can be an effective, although expensive, approach in this situation. However, officials need to understand that emergency relief may not be available if their businesses have not taken appropriate security measures with respect to the information they seek to protect.
To obtain emergency relief from a court, a business must show that it has a likelihood of success on its claims. To bring a successful claim for misappropriation of trade secrets under Oregon law or under the federal Defend Trade Secrets Act, a business must show that the information: 1, meets the definition of a trade secret; 2, derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and 3, is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
It is this last element that often torpedoes a business’ efforts to obtain emergency relief. Before going to court, a business must consider whether it will be able to show that it has taken reasonable measures to keep the information secret. A business can make such a showing by presenting facts to show that it:
1. limits/restricts access to the information (documents are locked in a file cabinet, electronic data is saved separately and password protected);
2. limits/restricts the number and categories of people who have access to the information;
3. limits/restricts physical access to locations where information is stored and/or used;
4. requires people who have access to the information to sign nondisclosure agreements (both internally and externally);
5. publishes a confidentiality policy putting all employees on notice regarding nondisclosure of information and providing instructions for use and dissemination of information; and
6. marks information “Confidential” and posts signs in areas where access is restricted.
When evaluating reasonable measures, a court will look at the size and nature of the business, the kind of information at issue, and the circumstances of the alleged misappropriation. However, in almost all situations, a court will not issue emergency or other injunctive relief to a business that could not bother to protect information it now claims is valuable and confidential.
To obtain relief when information is at risk, and as a regular part of ongoing operations, businesses should assess how they use, share and store confidential information. Then, based on that assessment, officials should implement policies and practices to protect the information.
This article was written by Elizabeth Semler, former Sussman Shank LLP Employment Law Partner.