Trade Secret Protection: When is an Employment Interview Not Really an Interview
An interesting article at workforce.com describes a controversy between Broadcom and Intel. Broadcom had been interviewing Intel's employees for jobs. While this is a seemingly innocent occurrence throughout human resources offices everywhere, Intel accused Broadcom of conducting the interviews in order to obtain Intel's trade secrets. Guess what? The court agreed with Intel and granted an injunction against Broadcom. The author, Christopher Kondon of the LA office of Kirkpatrick & Lockhart, notes the importance of educating interviewers about the importance of confidentiality and trade secrets. In my corporate days as a SVP of HR, I can remember an occasion where I was being aggressively recruited by a competing firm and was subjected to some unusually probing questions which, in light of this case, would be considered beyond the scope of an employment interview. Today, when I teach business law in an MBA program, we deal with this topic regularly. Kondon provides an useful definition in his article of the kinds of information that can be considered trade secrets:
"...trade secrets include a wide range of confidential business or proprietary information, such as chemical formulas, industrial processes, business plans and, under certain circumstances, customer lists. In order to maintain business information as a trade secret, one must take reasonable precautions to prevent the information from becoming generally known to his or her competitors. "Reasonable precautions" usually include requiring employees to execute confidentiality and nondisclosure agreements in favor of the employer."
I find that many employers really foul up in the reasonable precautions area. For example (Diane's quick list of how to lose trade secret protection):
- They fail to secure information that should be maintained in a locked area. For example, financial information, codes, etc. are left out in a department and others have free access as they walk through.
- They fail to mark things as confidential. Information that a competitor would love to get their hands on is transmitted throughout the company in the same manner as all other inter-office communication.
- They fail to obtain non-disclosure agreements when they conduct interviews of candidates who will potentially have access to sensitive information.
- They fail to obtain non-disclosure agreements when they have conversations with potential vendors or suppliers.
- They set up computer systems that contain specific and detailed information and do not restrict access. For example, a sales organization that enables all sales professionals throughout the company to have access to sales information for all other sales professionals, instead of restricting access to divisions or territories.
There are many others, but suffice to say this area is one that is continually evolving and companies should think about how they use and manage this information in order to adequately protect themselves.