How Should Companies Address Trade Secret Protection Issues with Departing Employees?
This article was generated by NotebookLM from Attorney Lai Wen-Chih’s book “From NDA to Trade Secret Management” PDF file. This is an experiment presenting the knowledge contained in a book in different forms using generative AI.
Book Purchase Links: Bookstore.com.tw, eslite, momo, San Min, Kingstone, Iread Gray Bear
Recently, there was a TechBang report about “Google’s Former Engineer Completely Ignoring Non-Disclosure Agreement, Sued After Publicly Disclosing Pixel Chip Details and Internal Files Online.” Even a large company like Google faces troubles from departing employee leaks. In fact, employees’ confidentiality obligations to enterprise trade secrets are not affected by their departure. As long as the information still meets the requirements for trade secrets under trade secret laws, even after employees leave, they still bear legal obligations not to infringe trade secrets. However, if departing employees actually leak secrets, the damage caused to the enterprise far exceeds what can be compensated through claims for trade secret infringement damages. The best approach is to address trade secret protection issues during the departure process. Let’s see how NotebookLM suggests addressing this through the book “From NDA to Trade Secret Management.”
How Should Companies Address Trade Secret Protection Issues with Departing Employees?
Properly handling trade secret protection for departing employees is a key aspect of enterprise trade secret management.
The following measures can help companies reduce risks:
I. Before Departure:
○ Remind Departing Employees of Confidentiality Obligations: After employees submit resignation applications, immediately remind them of their confidentiality obligations to the company and inform them of the legal consequences of violating these obligations.
■ Written notices, meeting records, and other documentation methods can record the reminder process for future evidence.
■ Emphasize that confidentiality obligations do not terminate upon departure and continue until the trade secret no longer requires protection.
○ Confirm Departure Documents: Require departing employees to sign departure documents confirming they have returned or destroyed all company confidential information, including paper documents, electronic files, physical objects, etc.
■ Departure documents can include confidentiality statements, equipment return checklists, confidential information inventories, etc.
○ Conduct Exit Interviews: Have human resources or relevant supervisors conduct exit interviews with departing employees, reiterating their confidentiality obligations and understanding their post-departure plans.
■ If departing employees plan to join competing companies, special attention should be paid to whether their work will involve company trade secrets, and appropriate preventive measures should be taken.
■ Exit interview records can serve as evidence for future disputes.
○ Information Systems and Equipment:
■ Immediately change departing employees’ access permissions to information systems to prevent continued access to company confidential information.
■ Recover company-provided computers, mobile phones, USB drives, and other equipment, confirming that all company confidential information has been deleted.
■ Consider creating mirror backups of computers used by departing employees for future investigation purposes.
○ Confidentiality Clearance Checks: For employees who may have accessed or held significant company trade secrets, consider establishing confidentiality clearance checklists and having relevant supervisors review them.
■ Confidentiality clearance checklists can include information about previous projects the departing employee participated in, clients contacted, information systems used, etc.
■ Use confidentiality clearance checklists to analyze potential trade secret risks after departing employees leave and take appropriate preventive measures.
II. After Departure:
○ Continuous Monitoring: Continuously monitor departing employees’ activities, such as whether they join competing companies or publicly disclose information related to company trade secrets.
■ Monitor departing employees’ activities through public information, industry news, social media, and other channels.
○ Gather Evidence: If departing employees’ actions suspected of infringing company trade secrets are discovered, immediately gather evidence, such as:
■ Obtaining departing employees’ emails, instant messaging records, file access logs from their employment period.
■ Obtaining departing employees’ work content and product information at competing companies.
■ Obtaining publicly disclosed articles and presentation materials by departing employees.
○ Take Legal Action: If there is sufficient evidence proving departing employees have infringed company trade secrets, consider taking legal action, such as:
■ Petitioning the court for a preliminary injunction prohibiting departing employees from continuing to use or disclose company trade secrets.
■ Filing civil lawsuits requesting departing employees compensate for losses.
■ Filing criminal charges pursuing departing employees’ criminal responsibility.
III. Other Matters for Attention:
● Non-Compete Clauses: If the company has signed non-compete agreements with employees after departure, attention should be paid to the legality and reasonableness of the clauses, and compensation should be paid according to the agreement.
○ Non-compete clauses’ terms, regions, and scope of occupational activities should be reasonably limited to avoid being overly broad and infringing on employees’ work rights.
○ Consider regularly contacting employees during non-compete periods, understanding their activities, and providing necessary assistance.
● Employee Relations: When addressing departing employees’ trade secret protection, attention should be paid to maintaining good employee relationships and avoiding overly aggressive measures that cause employee resentment and resistance.
○ Establish employee trust and support for company trade secret protection through transparent policies, sound communication mechanisms, and reasonable reward and punishment systems.
In Summary:
Protecting trade secrets requires enterprise effort at every stage. Establishing a comprehensive trade secret management system and enhancing employee confidentiality awareness are necessary to effectively protect the company’s important intangible assets.
