Though your business may not have “secret recipes” for cola drinks or fried chicken, your business undoubtedly has some process or information that it believes gives it an advantage over its competitors. This confidential information may take many forms such as a customer list that has been created through the years at considerable expense and effort; a product design that a business’s competitors do not have; or a pricing formula that generates greater profits. Importantly, if a business takes certain steps to keep this information confidential, the law will help protect it from becoming public information and getting into the hands of competitors. On the other hand, if a business does not take the correct steps your competitors are free to gain access to your information and use that information to their advantage.

This article recommends important steps that a business can take to protect its confidential information. The steps range from simple to more complex. However, from a legal perspective all of these steps are recognized as necessary in order to protect the confidentiality of your information.

  • Identify The Confidential Information. Before a business can protect its confidential information, or expect someone else not to disclose it, the business must be able to specifically identify what the information is that it considers to be confidential. The more specific a business is in identifying the confidential information, the better chance it has of protecting it.
  • Be Realistic In Identifying The Confidential Information. Obviously not all information can be classified as confidential. Generally, confidential information is information that is known only within the business and is not publically available. Narrowly and specifically identifying the confidential information allows a business to support its determination that the information is confidential.
  • Make Sure All Employees Understand What Information Is Confidential. Once a business has identified what information it believes to be confidential, it is essential that its employees understand what information the business considers to be confidential. The precise nature of the confidential information does not need to be revealed to the employees, but they must be told enough so that they know that the particular information is confidential and not to disclose it to others. For example, employees may be told that the pricing formula for Product X is confidential, without telling them the pricing formula.
  • Include A Confidentiality Statement In Your Employee Handbook. An Employee Handbook sets forth, among other things, an employer’s expectation of its employees. The Employee Handbook should also identify what a business considers to be confidential and inform employees of his/her obligation not to disclose that information. It is hard for an employee to claim that he/she was unaware that certain information was confidential if language to that effect is in the Employee Handbook and the employee has acknowledged receipt of that handbook.
  • Use Confidentiality/Non-Disclosure Agreements With People Who Have Knowledge Of And Access To The Specifics Of The Confidential Information. Certain people within a business, and consultants or others outside of a business, will have access to confidential information. In such cases, a business should have those individuals and/or entities sign Confidentiality/Non-Disclosure Agreements to put them on specific notice that the business considers certain information to be confidential and to give the business certain remedies against them should they disclose the confidential information.
  • Protect Confidential Information. It almost goes without saying that a business should not leave confidential information in the open. There are different steps a business can take to prevent others from gaining access to the information. For a smaller company, these steps might involve keeping the information under lock and key, while for a larger company, it might mean keeping the information in a password protected database.
  • Limit Access To The Confidential Information To Those With A Need To Know. Depending on the size of a business and the nature of your confidential information, not everyone should be given access to the confidential information. Access to this confidential information should be on a need-to-know basis. For example, a nationwide sales company may want to allow only its sales people to access its customer lists for that sales person’s territory, as opposed to allowing access to customer lists for all territories.
  • Protect Computerized Confidential Information With Advances In Technology. More and more confidential information is being stored on computers. At a minimum, access to confidential information on these computers should be password protected with the password being changed at regular intervals, i.e. every 3-6 months. In addition, you might consider a confidentiality “reminder” pop-up on the computer screen before the confidential information can be accessed reminding employees that the information is confidential.
  • Label The Information As Confidential. Consider placing labels on confidential information that clearly states that the information is “confidential.” This label can appear on the information itself and or on the container in which it is kept. It is yet another reminder to employees and others that information is considered to be confidential.
  • Conduct Employee And Consultant Exit Interviews. Exit interviews are generally important to remind departing employees and consultants of their obligations to the company, and to make sure that the employee’s departure or termination of a business relationship is smooth. An exit interview also presents an opportunity to reiterate to the employee and/or consultant his/her obligation to keep information confidential.

The steps outlined above are all fairly easy to implement. The more of these steps that a business undertakes, the more likely its employees will understand that certain information is confidential, and the more likely a court will help a business protect the confidential information.

Finally, a business should review the steps it has taken to protect its confidential information on a yearly basis. Protections that are in place during one year may need to be updated the following year due to developments in the law and changes within the business. Implementing the steps above will help a business protect its confidential information and maintain its competitive advantage.