Tag: Competitor

Keeping your Trade Secrets Safe: The Runaway Employee

How can a business protect its critical information when an employee goes to work for a competitor? Many employers simply assume that if it deems information “confidential,” the law automatically protects it when an employee leaves and goes to work for a competitor.  That’s not necessarily the case.  In order to protect its confidential information, such as intellectual property, information, systems, customer lists, pricing information and the like, an employer must take affirmative steps long before the rogue employee leaves to ensure that its information is protected.  Such information can be protected from disclosure both under Illinois common law and pursuant to the Illinois Trade Secrets Act (“ITSA”).

An employer’s trade secrets, such as its customer lists, are a protectable interest. An employer has a clear and ascertainable right in protecting its trade secrets. To show information is a trade secret under ITSA, an employer must meet two threshold requirements. First, it must show the information was sufficiently secret to provide the employer with a competitive advantage. Second, the employer must show that it took affirmative measures to stop others from acquiring or using the information. Examples of steps employers typically take to keep information confidential include keeping the information under lock and key, limiting computer access, requiring confidentiality agreements, and other employer efforts to advise employees that the information imparted to them must be kept secret. Establishing this second prong is where employers typically fall short.

Where employers have invested substantial time, money, and effort to obtain a secret advantage, the secret should be protected from an employee who obtains it through improper means. Although employees may take general knowledge or information with them that they developed during their employment, they may not take confidential information, including trade secrets. The taking does not have to be a physical taking by actually copying the names. A trade secret can be misappropriated by physical copying or by memorization. Using memorization to rebuild a trade secret does not transform the trade secret from confidential information into non-confidential information. A trade secret can also be obtained through reverse engineering

Whether and how an employer keeps information secret is one of the most important factors when determining whether information is a trade secret. When information is generally known or understood in an industry, even if it is unknown to the public at large, it does not constitute a trade secret. If a business fully discloses information throughout an industry through a catalog or other literature, it is not considered a trade secret. If the information can be readily duplicated without considerable time, effort, or expense, it is not considered a trade secret. If a customer list, for example, is generally available to all employees and the employees are not required to sign confidentiality agreements, the list is likely not considered a trade secret.

By far the most litigation in this area is over whether an employer’s customer list is a confidential trade secret.  Whether customer lists constitute trade secrets largely depends on the facts of each case.  Customer lists and other customer information can be considered a protectable trade secret if the information has been developed by the employer over a number of years at great expense and kept under tight security. However, the same type of information is not protectable where it has not been treated as confidential and secret by the employer, was generally available to other employees and known by persons in the trade, could be easily duplicated by reference to telephone directories or industry publications, and where the customers on such lists did business with more than one company or otherwise changed businesses frequently so that their identities were known to the employer’s competitors.

Illinois courts have found that customer lists do not constitute protectable trade secrets where, for example: a) the particular industry was competitive and customers often dealt with multiple companies; b) the employer had failed to produce sufficient evidence to demonstrate that the customer list was subject to reasonable efforts to protect its secrecy; and c) sufficient efforts had not been taken to maintain the list’s secrecy. To be a protectable trade secret, the employer must demonstrate the information it seeks to protect was sufficiently secret to provide it with a competitive advantage. However, for steps to be deemed sufficient to protect a trade secret, extensive steps must be taken to protect both the electronic and hard copies of the purported trade secret.

For more information regarding the protection of a company’s confidential information, please contact:

Howard L. Teplinsky at:

(312) 368-0100 or hteplinsky@lgattorneys.com

That Looks Just Like Our Product!

The phone rings and it is one of our clients telling us that someone has taken the design of their product and is selling a competing product.  The competitor is not solidly a typical trademark infringer, as they named the infringing product something completely different.

Trade dress to the rescue?  Not so fast.  Patent design or trade dress infringement theories can sometimes be a successful remedy, but not always.   Patent design requires a prior patent registration, which oftentimes, the victim of the infringement either did not realize it, should have filed a design patent, or did not take the time or money and put it toward that task.  Therefore, patent design is only as good as the forethought and planning that may have (or may not have) gone into the product design.

So, we are left with trade dress protection.  Trade dress is typically defined as the “look and feel” of a product and is a bit elusive considering it is not usually filed in an application before the USPTO.  Therefore, this client would be left to try to factually establish infringement in court, an often time consuming and expensive venture.

Converse was certainly up for the challenge several years ago.  The shoe company sued multiple companies concerning the alleged “copying” of its iconic Chuck Taylor shoe designs.  An argument typically argued by defendants in these cases is functionality – that is – if the design is functional, a necessary component for the product to work or function, then that element is not eligible for trademark protection.   However, a most interesting other argument is that Converse waited so long to file these lawsuits, that the design was already copied by so many companies that it became “generic.”   While trademark infringement defendants often argue laches, or delay in filing suit, that has somehow prejudiced defendant, we do not often see an argument that delay caused the design to become generic.  That is, that there already were so many infringers and Converse did not act quickly enough so as to determine that the design is actually not protected.

What is interesting is the lesson to business owners and designers.  This example is yet another reason to periodically review the product lines and advertising to determine whether the brands are adequately protected.  Additionally, companies should also be vigilant when it comes to protecting its product designs, and even website designs, before it is too late.

If you have any questions in this area, please contact:

Natalie A. Remien at:

nremien@lgattorneys.com or 312-368-0100

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