Strategies for Protecting Confidential Information :

There are two principal sources of leakage of or trade secrets or confidential information to competitors or other third parties: disclosure and departure.

Disclosure – trade secrets can be leaked advertently or inadvertently to competitors or third parties through careless or deliberate disclosure by company representatives. For example, a sales representative or accounts manager meets with a potential supply chain about pooling resources to go after a new market or business opportunity. During the meeting, proprietary and confidential information are disclosed.

The business purpose of the disclosure or exchange of information might be quite legitimate, but the legal effect of disclosing confidential information without the benefit of a confidentiality or non-disclosure agreement could be disastrous. Corporate must make it both a corporate policy and business practice not to engage in commercial negotiations with third parties (whether direct competitors or not) without first ensuring that they have a signed Confidentiality or Non-Disclosure Agreement in place.

Departure – The other source of leakage of confidential business information is the exit of executives or key employees from the organization. After employment ceases, the employee retains the right to use any general skill, experience and knowledge he has acquired in the course of performing his normal duties, in order that he can continue to earn a living. This has to be balanced against the employer’s right to protect its confidential information. If the employee has retained any confidential information, he is not entitled to use that information without the employer’s authority.