Bellas & Wachowski News

If you don't watch your business secrets, your competitive edge might walk right out the door.

Suppose one of your key employees leaves your company and goes to work for a competitor.  That's bad enough in itself, but what if your former employee takes more than his or her talent and experience?  What if that employee knows all your trade secrets: your formulas, suppliers, techniques, customers and contacts?

In an information-based society, a company's greatest assets take the form not of tangible assets, but of information.  Failure to protect those secrets can mean the loss of everything from key customers to confidential processes and techniques -- the very information that gives your company a competitive edge in the marketplace.

The law treats trade secrets as property and illegal to steal.  There's a growing recognition of the value of trade secrets and there's an increasing effort by the courts to fashion rulings allowing companies to retain their trade secrets.  The real question in these cases is whether a given set of information is really a trade secret.  To some extent, it's a matter of degree.  A departing employee who physically removes a crucial customer list - even by copying it and leaving the original - is taking something that belongs tot the employer.  But if the employee merely remembers the names of the clients and reconstructs the list, that's not necessarily stealing trade secrets.  Court do not require former employees to forget what they know.  Your best protection when it comes to customer lists is a noncompete agreement signed by employees while they are still working for you - or a clause in their employment agreements not to solicit former customers.

Under the Illinois Uniform Trade Secrets Act, your business information are trade secrets if three criteria are met:

1.         It must have independent economic value to people outside the company.

2.         The information must be generally unknown and unlikely to be discovered by lawful means.

3.         The owner of the secret must make efforts to maintain the secret.

There are specific steps you can take to safeguard your trade secrets.  Making these efforts provides a double layer of protection.  First, it reduces the chance that trade secrets will get out of your company in the first place.  Second, it builds your legal defense in the event a competitor obtains your trade secrets and starts using them against you.

-  Put employees on notice.

-  Improve security.

-  Be careful what you say in internal communications.

-  Shred documents containing confidential information.

-  Contact subsequent employers.

-  Conduct exit interviews.

-  Use noncompete  or nonsolicitation agreements.

• George and Misty Cygan recently settled a case alleging breach on contract on behalf of a delivery service whose contract with a nursing home chain was beached.
• George recently published an article in the trial newsletter of the Illinois State Bar Association titled, "Jablonski v. Ford: Is the Illinois Supreme Court crafting a new approach to duty analysis and proof in negligent-product-design cases?"
• George recently concluded an arbitration in Atlanta in which a franchisee claimed fraudulent representation against a franchisor of postcard mailers.
• We recently won an appeal in the Illinois Appellate Court, which gives certain shareholders of Excelon the right to sue management for breaching their fiduciary duty to the minority shareholders of a company acquired by Excelon. The case is scheduled for trial in June, 2012.
• One of our clients recently discovered that its CFO had been diverting funds of the businesses for his own purposes and we helped remove him from his position and have filed suit against the former CFO to recover the converted funds.
• Misty completed an arbitration in which a supplier of uniform and towels sued our client for breach of the service contract.
• Bill settled a lawsuit by a life insurance agency against several of its former sales people for violation of the restrictive covenants in their employment contracts. We had successfully defended a preliminary injunction sought by the insurance agency preventing the employees from working in the industry.
• Bill and George recently settled a class action suit in federal court on behalf of employees who were forced to work "off the clock" and not compensated for this work.