Under Lock And Key

With so many workers job-hopping these days-especially in the high-tech and IT industries-it's inevitable that they take some trade secrets with them. "Once exposed to trade secrets, it's often difficult for an employee to purge them from memory when working in the same field for a new employer," says James Gatto, an intellectual property and technology lawyer for Hunton & Williams in Richmond, Virginia.

Nowadays, the passing of trade secrets has little to do with espionage. "What happens most frequently is someone is hired by an employer to work on the same kind of product or project that they've been working on for a competing company," Gatto says.

In the past, the burden of proving a trade secret was used by an ex-employee at a new company often fell to the prior employer. But that's changing: In some areas, it's new employers who must prove new employees aren't using trade secrets on a new product, project or service.

To avoid problems and potential liability, hiring companies should be wary when looking for employees. "You need to be extremely careful about targeting employees from one company-especially if it's a direct competitor," says Gatto. In other words, be careful about raiding a competitor's work force. Gatto offers tips for staying out of court: Advertise widely, avoid hiring only from competitors and allow an employee's former co-workers to approach you first.

To keep your information from walking out the door, perform exit interviews. Says Gatto, "This reminds employees of their confidential obligations and puts them on notice."

Ellen Paris is a Washington, DC, writer and former Forbes magazine staff writer.

Contact Source

• Hunton & Williams, jgatto@hunton.com

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This article was originally published in the July 2000 print edition of Entrepreneur with the headline: Under Lock And Key.