Rethinking Trade Secrets Under the Work From Home Model

Work from home has become the new normal as a result of the ongoing Covid-19 pandemic. As the virus spread exponentially, companies had to transition to a complete remote working environment. This abrupt switch to remote working did not allow businesses to plan well in advance and set up protocols for their business operation and employees. As a result, companies may face immense challenges in safeguarding their intellectual property, more specifically, their intellectual assets in the form of trade secrets.

Trade secrets may be a lesser-known yet popular way of protecting intellectual assets of businesses. As per World Intellectual Property Organization, a trade secret is information having commercial value by virtue of being a secret known to limited set of people and subject to reasonable measures to maintain the secrecy. Many businesses have commercially valuable information not known to or easily accessible by their competitors. Typically, the scope of trade secret protection is broad as it covers any secret information that provides a competitive advantage to a particular business. Unlike other intellectual property rights such as patents and trademarks, trade secrets do not require registration for protection. An owner can enjoy trade secret protection so as long as the information is secret. However, the responsibility to protect a trade secret is on the company itself, which requires companies to take active steps and adopt adequate safeguards to prevent disclosure of commercially valuable confidential information. For a trade secret to receive legal protection in the United States, a company must take reasonable efforts to maintain the secrecy of the confidential information. However, what qualifies as “reasonable efforts” is a fact-based inquiry for courts to determine on a case-by-case basis and a failure to satisfy the standard may result in denial of right of trade secret for a company. Protecting trade secrets is therefore a sensitive endeavor and requires owners to adopt comprehensive mechanisms to ensure that they are not easily compromised.  

The delicate nature of trade secret protection makes it challenging for companies to protect it. The ambit of trade secret is broad enough to cover a whole host of information, ranging from formulas, patterns, programs, and research and development data to sales data, customer list, marketing strategies.  Some affirmative steps for protecting such confidential information may be identifying trade secrets, controlling both physical and electronic access, assessing and managing risks, training employees and third parties handling such information, signing confidentiality and non-disclosure agreements, establishing a team to monitor protection, reviewing existing policies and making improvements to current policies. These steps are cumbersome even under normal circumstances, and more so when companies have little oversight over their employees or the use of their proprietary information.  

The remote working environment due to the ongoing pandemic naturally poses greater challenges for companies in preserving their trade secret. It is nearly impossible to restrict access to sensitive information and monitor how such information is being shared, stored, or disposed when most employees are working from the comfort of their homes. Employees are no longer working in secured facilities where trade secrets are closely monitored through layers of security measures. Moreover, the use of personal devices or accounts, use of unsecured networks for communication, or use of company devices by unauthorized person can increase exposure of sensitive information. Employees may fail to identify trade secrets or be callous when handling such information under this new working environment. As a result, companies that are unable to mitigate the abovementioned risks may fail to meet the reasonable effort standard to enjoy trade secret protection.

Moreover, companies should revise their existing policies to address the work from home model. This will require them to explore new and advanced ways to monitor trade secrets and perhaps switch to a more secured platform where company information is stored and shared. Furthermore, companies will inevitably be required to train employees on how to handle trade secrets when working from home and adapt to new operational systems that are put in place. Needless to say, implementing new mechanisms will come at an additional (and steep) cost. This will be no cakewalk for companies that are already suffering from a cash crunch and operating, if at all, under frugal circumstances. Sadly, for those companies that are struggling to stay afloat, protecting trade secrets may not fall high on their priorities.

Therefore, it is important for businesses to rethink how they may be able to protect their trade secrets while operations are conducted remotely. Trade secret protection allows companies to maintain their economic stronghold for an indefinite period of time. However, this comes at a cost of maintaining robust systems and a lifelong commitment to protecting commercially valuable information. With the ongoing pandemic and employees working from home, companies will continue to face hardships and struggle to safeguard their trade secrets unless they take proactive steps in light of the times.