Put A Lid On It

Legal Limits

There are legal reasons to encourage employees to temper what they say. The only way for companies to establish intellectual property rights, or legal ownership of their ideas, is to show that people within take reasonable steps to protect their proprietary knowledge. If a competitor overhears your employees talking openly in detail about product specs and then uses your ideas in its own products, you may not have a legal case. Your competitor can argue that you weren't protecting your knowledge-it was freely revealed in the public domain.

Rashid Khan, CEO and president of Cary, North Carolina-based Internet firm Ultimus Inc., remembers a time when he and two co-workers had a meeting scheduled with a large client and were eating breakfast in a hotel the day of the meeting. A group of businesspeople came in and sat at a nearby table. Khan and his co-workers suddenly grew quiet to listen as the nearby group's conversation turned toward shop talk. "It was the sales manager and team from our main competitor," says Khan, 47. "They were in town to make a presentation to the same company that day." Within a few minutes, Khan's group was privy to the competitor's strategy.

Employees who fly the "nerd bird," any regular flight between San Jose and such high-tech hubs as Austin, are noticeably quieter these days. "Companies are actively telling employees not to do any work while they're on an airplane. It's just too easy for people to overhear and see things," Epstein says. "Companies have to be extraordinarily vigilant."

Rick Malone, CEO of Broomfield, Colorado-based Kiosk Information Systems, is one entre-preneur with concerns about information leaks. His 7-year-old company makes electronic public information kiosks for such clients as IBM and Disney, and Malone wants to protect his contracts as well as information about his clients' computer systems. The company did $7 million in sales in 1999 and projects between $12 million and $15 million in 2000. "Nondisclosure is critical in our business," says Malone, 43, who has made it clear to his 55 employees that he expects them to stay tight-lipped in public places and be careful about how they use technology. He's taking a twofold approach, talking to every employee about his expectations of proprietary privacy, then having them each sign a nondisclosure agreement that explains the information not to be discussed or displayed in public.

The problem is, it doesn't take much for people to start talking about what they do. For most of us, as soon as we relax, all bets are off. "A general conversation can quickly become specific to a company and its clients, especially if someone knows how to steer a conversation," says Seena Sharp, a Hermosa Beach, California, competitive intelligence expert and president of Sharp Market Intelligence, a market research company.

Malone recalls one incident where a client called him with concerns that a Kiosk Information Systems salesperson might have been unintentionally leaking too much information in public. Malone explained the situation to the employee. "It was inadvertent on the employee's part. It's really easy for salespeople to lose awareness of confidential information when they deal with it every day," he says, adding that his sales employees took note of it and adjusted their habits.

Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.

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This article was originally published in the December 2000 print edition of Entrepreneur with the headline: Put A Lid On It.

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