Confidentiality and Trade Secret Protection (IP Concerns)

Before we discuss confidentiality and trade secret protection, let’s start with a real-life story:


Robert O’Rourke was an engineer at Dura-Bar, a cast-iron manufacturer. He accepted a position as vice president of Hualong, a competing cast-iron manufacturer, without Dura-Bar’s knowledge. On a Sunday prior to his last day at Dura-Bar, O’Rourke entered Dura-Bar with his key and downloaded over 1,900 documents onto his personal hard drive. After his last day at Dura-Bar, O’Rourke went to drinks with coworkers and informed them for the first time he was going to work at Hualong. The coworkers informed Dura-Bar management which contacted law enforcement for emergency search warrants. About 5 days later, O’Rourke was boarding a flight where he was stopped and searched by the U.S. Customs and Border Patrol. They found the hard drive with all of Dura-Bar’s documents in his checked baggage. In July 2017, a grand jury returned a 13-count indictment against O’Rourke, charging him with stealing, downloading, and possessing trade secrets (and attempting to do the same) in violation of 18 U.S.C. § 1832. (U.S. v. O’Rourke case)


Does this surprise you? This happens all.the.time. I am serious. Now, realize that not everything an employee takes is considered a trade secret. An employee is allowed to take general information that specifically relates to their personal development but cannot take anything that qualifies as a trade secret. There are trade secret protection laws both at the state and federal levels so even if your client has not signed a confidentiality agreement, if they steal trade secret information, they can be prosecuted or enjoined from using the information. So, step one, let’s be sure our client has not taken anything that could be considered a trade secret. We cover trade secrets more thoroughly in Unit 11.


Many employers require their employees to execute Confidentiality (non-disclosure) Agreements. They can be stand-alone agreements or can be encompassed within an employment agreement. If your client has one, you need to know what it says and be able to advise them. The most important thing to check is the definition of confidential information. We will cover Confidentiality Agreements more thoroughly in Unit 13.


💡What if the entrepreneur developed some intellectual property while still working at the employer? If so, was there an Inventions or Intellectual Property Assignment Agreement?



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To the extent possible under law, Samantha Prince has waived all copyright and related or neighboring rights to Entrepreneurship Law: Company Creation, except where otherwise noted.