Recommendations for Avoiding Trade Secret Misappropriation

Although the following recommendations will not eliminate all risks, each one will have a cumulative effect toward establishing a structure that is most likely to prevent the disclosure or use of trade secrets by new employees:

1. When hiring new employees, send a letter to their former employer giving them notice of the employee’s occupation and position. Be forthright with their job title and description, and inform the former employer that you have a structure in place so that any trade secrets of the former employer will not be disclosed by their former employee.
2. Write a letter to the new employee before he or she is hired making it clear that you do not want him or her to use any confidential information from the previous employer.
3. Take steps to ensure that no information, data, or material (written or digital) containing proprietary or confidential information of the prior employer are retained or brought into the office by the new employee.
4. Require all new employees to sign a non-disclosure agreement to the effect that they will not disclose any trade secrets of their former employer during the course of their employment.

Suggested clauses for a new employee to agree to:

I acknowledge and warrant that I have not and will not bring with me to ____ (new Company Name) or use in the performance of my responsibilities at ____ (former Company Name) any documents or material of a former employer which are not generally available to the public, unless I or ____ (new Company Name) first obtain written permission from the former employer.

I further warrant that I have not and will not bring with me to ____ (new Company Name) or use in the performance of my responsibilities at ____ (new Company Name), any software which is not lawfully licensed to ____ (new Company Name).

During my employment, I will not make use of any trade secrets or other proprietary or confidential information belonging to another employer or other third party without the express approval of ____ (new Company Name) and such other employer or third party.

CHECKLIST FOR NEW EMPLOYEE BRIEFING

1. Establish issues and goal for meeting.
2. Review California statute regarding Trade Secret Misappropriation.
3. Ascertain former employer’s knowledge of new employment.
4. Determine what types of trade secrets of former employer that new employee knows (or may know).
5. Determine what materials of former employer that new employee has in his or her possession (i.e., documents, electronic files, laptop, phone, computer, flash drives, e-mails, samples, products, etc.).
6. Obtain copy of former employment job description and the employment contract or agreement.
7. Establish that new employee knows (1) not to misappropriate former employer’s trade secrets; and (2) who is the point of contact for any questions about trade secret misappropriation.

QUESTIONS FOR NEW EMPLOYEE

1. What company are you working for now?
2. Why are you leaving?
3. Have you reviewed your employment agreement? (It is important for you to comply with the terms of that agreement.)
4. What is your current job description?
5. What will you be doing for __________?
6. You understand that you must not bring anything of your former employer to your new job at ___________?
7. You understand that you must not use any trade secrets from your former employer or from anyone else. (Review California Civil and Penal Codes Sections)
8. Explain that it is acceptable to use general knowledge and skills at your new employer.