Protection of Proprietary, Confidential and Trade Secret Information

Protecting Your Utah Proprietary Information

In today’s competitive economic climate, protecting confidential, proprietary and/or trade secret information  is an essential part of successful business protocol. Proprietary information can be the lifeblood a business, but disclosure, misuse, theft or misappropriation of such information can ruin a thriving business. Because of this, it is important for business owners to properly identify such information and keep it out of the wrong hands.

However, it is just as important not to treat all aspects of your business as proprietary. For example, information that can be obtained easily through “public sources,” through a “basic
research task,” or through a “simple internet search” is not proprietary. See e.g., CDC Restoration & Constr., LC v. Tradesmen Contrs., LLC, 274 P.3d 317, 326 (Utah Ct. App. 2012). Such publicly available information is not entitled to trade secret protection and efforts to protect such information are largely useless.

 

What is proprietary information?

In order to be deemed “proprietary”, a business owner must derive economic value from keeping the information confidential. Utah law does not necessarily limit what can be considered proprietary. As such, financial projections, client lists, technical specifications, manufacturing processes, or any other information that makes a product (or process) unique based on its secrecy can be considered proprietary. Importantly, however, the information cannot be publicly available and must derive some independent economic value.

How can proprietary information be protected?

Business owners also have to take certain steps to ensure the integrity of their secrets.

First, a thorough risk assessment is helpful in identifying what must be protected and where potential leaks may exist. Understanding where vulnerabilities lie are essential in devising a protection plan and insuring that protocols are implemented and properly followed.

Second, legally binding documents can protect proprietary information. These include non-disclosure agreements, non-compete agreements and proprietary acknowledgment disclosures. Besides limiting the number of people who know the trade secrets, these documents create clear rules for how they may be used, disclosed and otherwise utilized

Further, companies may also use a variety of data security programs to protect information on company laptops, tablets and smart phones. This may include passwords that limit access to internal systems, firewalls that protect against external threats and programs that can protect (or wipe clean) sensitive information. This is especially important if a company device becomes lost or stolen.

Security protocols, whether through agreements or programs must be updated regularly, and employees who have access to such information must be reminded of their legal duty to maintain the company’s trade secrets.

Ultimately, understanding how Utah and federal law protects confidential, proprietary and trade secret information is essential. It is also essential for employees to understand these legal requirements. 

Employees who jump from employer to employer may be bound by non-disclosure agreements, fiduciary duties, contractual obligations and other duties not to use or disclose such information in future employment or otherwise.  Failure to abide by such restrictions can lead to time consuming and expensive litigation.

For example, while Utah Courts have held that "[g]eneral knowledge or expertise acquired through employment in a common calling cannot be appropriated as a trade secret" and "the efficiency

and skills which an employee develops through his work belong to him and not to his former employer," employees may still be bound by various agreements prohibiting the use of certain information, as well as obligations imposed by statutes, such as Utah’s Uniform Trade Secrets Act (“UTSA”) which is codified in Utah Code Ann. §13-24-1 et seq.