Contractual Strategies to Protect Business Secrets

In this chapter we consider the contractual protections a company can adopt to effectively protect its business secrets, which include but are not limited to trade secrets and sensitive information. As a practical matter, in order to leverage the value of confidential business information, the information must be shared with others—employees, partners, suppliers, customers. There is no way to reap the benefits of valuable confidential information if that information is merely locked away in a vault for no one to see or learn or use. Protecting confidential business information through contract is a ubiquitous practice. Those who share or receive confidential information in their day-to-day responsibilities are no doubt familiar with non-disclosure agreements. Sometimes the use of such agreements becomes so commonplace that little thought may be given to the strategic implications of the agreements. But recent developments in law and policy suggest that owners of confidential business information should carefully evaluate their contractual protection strategies. Specifically, the fundamentals regarding contractual protections in the context of disclosures to employees, other entities, and even end consumers can be evaluated and considered as part of an overall strategy to protect business information through the use of contracts. In this chapter we consider the contractual protections in three contexts, when sharing (1) with employees, (2) with external entities, and (3) with end customers.