As an emerging tech company, trade secrets and other confidential information can provide you with competitive advantages in the marketplace. However, as your business grows, the need to protect critical trade secrets is sometimes overlooked. Unfortunately, failure to take reasonable measures to safeguard this information may result in the inability to protect these valued assets when necessary.
Emerging tech companies can gain an advantage in protecting their trade secrets by taking a systematic approach to:
- understanding their trade secret portfolios;
- evaluating the strengths and weaknesses of existing policies and procedures being used to protect these valuable assets; and
- implementing corrective measures to protect trade secrets from misappropriation and misuse.
For companies without existing policies and procedures, conducting a comprehensive trade secret audit may be beneficial as well.
Who Conducts the Audit?
As the scope of an audit may touch upon many business and legal disciplines, audit teams generally have backgrounds in employment law, intellectual property law, data privacy, governance, preservation, non-competition and trade secret enforcement, and litigation readiness and responsiveness.
Determining the Audit Scope
The scope of any trade secret audit must be tailored to a company’s industry, its assets, existing policies and practices, and business needs and objectives. As a best practice, an audit team will take time to learn more about your business, help identify protectable assets and existing security protections, and explore any past trade secret issues and concerns you may have. The team will also meet with you to review your overall needs and objectives in conducting the audit.
Conducting the Audit
Although there is no “one-size-fits-all” approach, a proactive, comprehensive trade secret audit should include the following elements:
Your audit team should work closely with management to identify your company’s assets, including identifying information that may qualify as a trade secret, and other assets that may not, but are still worthy of protection. In doing so, your audit team will help classify the importance of those assets and determine how your company currently protects them. As part of this process, your audit team should review, among other things, employee and third-party confidentiality agreements, employee non-competition/non-solicitation agreements, technology use agreements, invention assignment agreements, acceptable use policies, physical and data security policies, data governance and retention policies, training programs, and litigation readiness and response protocols.
Audit Report and Plan of Action
After the audit is complete, your audit team will provide you with a comprehensive report that identifies the items reviewed, risk areas where your assets may be susceptible to loss, and best practices concerning managing and protecting your assets. After management has an opportunity to review the report, your audit team will work with you to develop a trade secret protection plan consistent with your business objectives and needs.
Minimize Your Risk
Properly identifying and classifying trade secrets and other confidential information as well as establishing effective protection for those assets, will help maintain and enhance your company’s competitiveness. A proactive, comprehensive trade secret audit and protection plan can reduce your risk of losing trade secrets and other intellectual property.