Pssst, the Secret Is Out

When a trade secret gets out or is stolen, the ramifications are enormous; proof positive that trade secrets are valuable assets to be protected.

If you haven’t seen the news in the last little while, you may be astounded at the damage awards in two controversial trade secret cases. One in California came in with a jury verdict of $36.3 million in damages in a trade secret and breach of contract case. In Georgia, there was another settlement of $37.3 million. There may be another chapter written in both of these cases, as they may be appealed.

Having said that, the staggering amount of the awards serves to point out something very important to the business community – trade secrets are invaluable to businesses. The fact is that companies with trade secrets they don’t want to lose to another company need to ensure they are protected through non-disclosure agreements (NDA). There is more than one way to protect secrets and it’s for this reason that an expert Austin business lawyer is the best person to turn to when those secrets need to be kept.

Non-disclosure agreements are not standard, run of the mill pieces of paper that an employee signs. They are, in most instances, tailor-made for a specific situation and in some instances for the people who need to sign them. No business should consider operating without a non-disclosure agreement if they have trade secrets that are critical to their industry. For this reason they need to discuss with the lawyer the categories of individuals who need to become acquainted with an NDA as a prerequisite of their employment.

Within and outside of any corporation there are a wide variety of individuals who may have access to a trade secret, and those include, but are not limited to employees, consultants, customers, suppliers, other existing or potential partners and angel investors or merger and/or acquisition aspirants.

Struggling to keep a lid on that secret is of primary importance to the company who will need to consider other methods of secrecy such as encrypted password protection, storing critical material under lock and key, limiting distribution of the crucial information and reminding employees frequently that they need to keep what they know to themselves.

Ironically, many a company that does have secrets to keep finds themselves in the position of wanting to hire someone who used to work for their competitors. This potentially awkward scenario is best addressed by having the new employee sign specific employment agreements to not divulge what they know. Obviously this would be a sticky situation that may have the potential to blow up later should the worker choose to talk about what they know despite having an agreement in place.

Often when an employee is leaving a company and has had access to trade secrets, they need to consider how to handle the potential possibility of being sued for leaking those secrets. Whether or not they are going to work for the competition or start their own business, if they’re smart, they need to have a clear understanding in writing about what they may take when they leave. The trick of course is living up to that agreement.

Jack Zinda is an Austin business lawyer with Heselmeyer Zinda, PLLC. To learn more about Austin business attorney Jack Zinda visit

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