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Practical Tips for Protecting Valuable Information

Most businesses, whether they contain manufacturing operations or provide services to their customers, have information which the businesses consider valuable and which give the businesses a competitive advantage over their competitors. This information may be a chemical formula, manufacturing process or confidential business or financial information. Taking the right steps to keep this information secret is an important part of maintaining and growing a successful business.

The following factors are used to determine whether certain information is protectable as a trade secret or confidential information:

  1. the extent to which the information is
    known outside the business;
  2. the extent to which it is known by employees and
    others involved in the business;
  3. the extent of measures taken by the business to
    guard the secrecy of the information;
  4. the value of the information to the business and to its
    competitors;
  5. the amount of effort or money expended by the
    business in developing the information; and
  6. the ease or difficulty with which the information could
    be properly acquired and duplicated by others.

In order to keep information secret, we recommend the following steps:

  1. identify sensitive proprietary information;
  2. limit access to the information to those individuals
    who need to know it;
  3. educate those individuals on the importance of
    keeping secret information confidential;
  4. if the secret information must be shared with other
    businesses or governmental agencies, only disclose
    the confidential information after a confidentiality
    agreement is signed or practices maintaining
    confidentiality set forth in a statute (such as
    Pennsylvania's Amended Right to Know Law) are followed;
  5. if the information is stored in electronic format, use
    appropriate password protection and consider
    implementing policies under which individuals cannot
    download the confidential information from the
    business computer on to their home desktop
    computer or personal date assistant such as a
    Blackberry, iPhone or flash drive;
  6. adopt, implement and enforce appropriate policies
    for retaining and destroying confidential information
    when it is no longer needed;
  7. put copyright notices on all drawings, product
    specifications and material that are provided to
    vendors and third parties and consider a "click-wrap"
    notice for electronic data and applications where the
    computer user must read the confidentiality
    obligations and click "I agree" before being given
    access to the information; and
  8. prepare covenants not to compete for those
    individuals having access to the confidential
    information.

For advice or assistance regarding this issue, please contact the author of this article, any member of the Business Transactions Group, or any MacDonald Illig attorney with whom you have worked.