Tag: litigation

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

Is Your Business Litigation Proof?

The heading of this blog is a misnomer. There is no such thing as being litigation proof. Anyone can sue your business for any reason and meritorious or not, you will still have to defend the claim.

Still, there are many important steps a business can and should take to reduce its exposure and put itself in an advantageous position in the event a lawsuit is filed. Here are two simple actions that every business, large and small, should take in order to be a little bit more secure in today’s volatile world.

1. An Updated Employee Handbook

Employee handbooks set forth company policy for all employees to follow. Handbooks are useful reference materials that employees can rely upon to guide their day to day activities. They are also evidence of a company’s practices that can be introduced in the event of a lawsuit.

As a business grows, it should be mindful that different laws will apply to it. For example, once a business employs 15 employees, that business is now subject to the provisions of the Americans with Disabilities Act (“ADA”). Once that happens, an employee handbook should be modified to include language related to the reasonable accommodations that the business will make to comply with the ADA. If an employee with a disability were to file a claim under the ADA, a company with a handbook containing reasonable accommodation language would have a stronger argument that its practice is to comply with the ADA, than a company without such a policy in its handbook.

Also, business owners must be mindful that the law is constantly changing. For example, Illinois just enacted a law that requires an employee’s existing sick leave be granted to employees not only while they are sick, but also to care for sick family members (read more about that law here – http://lgattorneys.com/illinois-employee-sick-leave-act). Illinois businesses should amend their handbooks to reflect the change or discuss the pros and cons of moving away from sick leave/vacation time to paid time off that does not differentiate between sick leave and vacation time.

2. Record Retention Policy

If a company becomes involved in litigation, regardless of the issue, there is going to be a records request for all relevant documents in anyway related to the underlying lawsuit. This often involves emails and other electronic communications.

Having a records retention policy is important for several reasons. First, it ensures that all documents are kept for the optimal amount of time to conduct business without clogging servers or storage spaces. Second, it ensures that a company isn’t holding any documents for longer than legally required. Should a business be subject to a records request, a business is required to produce the documents in its possession. A plaintiff in a suit cannot use a document against you if you do not have it (and are not legally required to have kept it). Third, there are many record retention laws specific to different areas of business. A record retention policy can make sure a business does not violate the law by getting rid of documents too soon.

It is important that the business in question follow its policy universally and not on an ad hoc basis. As long as there is not a litigation hold in place requiring a company to keep all related records, then the company is free to follow its record retention policy without inadvertently destroying evidence and leading to a claim of evidence spoliation.

By consulting with an attorney and preparing an employee handbook and records retention policy, a business can take important first steps toward avoiding litigation, or at least being better placed to withstand a lawsuit if one comes its way.

For more information about developing an employee handbook or record retention policy appropriate for your business, please contact:

Robert Cooper at:

rcooper@lgattorneys.com or 312-368-0100.

Illinois Adopts Uniform Interstate Depositions and Discovery Act

On July 20, 2015, Governor Rauner signed into law a bill that enacts the Uniform Interstate Depositions and Discovery Act (the “Act”). The Act reduces the costs and simplifies the process of litigation in out of state cases where it is necessary to engage in discovery, such as the production of documents or taking of depositions, of a party or parties that are located in the State of Illinois. The Act has been adopted in thirty-eight (38) states and has been introduced for consideration by the legislature in several others.

Prior to the adoption of the Act, an out of state litigant seeking to issue a subpoena to an individual or entity in Illinois was required to file a petition with the Illinois court located in the county where the individual or entity resides, is employed, or transacts business. For example, if a lawsuit pending in Wisconsin, involving a car accident in Wisconsin, was witnessed by an individual who resides in Cook County, Illinois, the parties to the lawsuit would be required to issue a subpoena in Wisconsin, institute an action and file a petition with the Cook County Circuit Court, obtain an order from the Cook County court, and then issue a subpoena in Illinois for testimony of the witness.

Under the Act, this process is streamlined.  An out of state litigant seeking to subpoena a witness in Illinois must simply submit a subpoena issued in another state to the clerk of the court in Illinois, who will then issue an Illinois subpoena for service on the witness in Illinois. Although the Act simplifies the procedure of obtaining a subpoena in an out of state case, subpoenas issued in Illinois are still governed by the Illinois Supreme Court Rules and Illinois state law, including rules regarding the service of subpoenas, motions to quash subpoenas, and the taking of depositions.

If you have any questions regarding the State of Illinois’ adoption of the Uniform Interstate Depositions and Discovery Act, please contact:

Kristen E. O’Neill at:

koneill@lgattorneys.com or 312-368-0100

Attention Condominium Associations, Condominium Unit Owners, and Condominium Board Members!

The Illinois Condominium Property Act (the “Act”) provides that all meetings of condominium board members are to be held in person and open to all unit owners, with very limited exceptions.

In fact, the Act requires that a condominium association’s bylaws must provide:

“[M]eetings of the board of managers shall be open to any unit owner, except for the portion of any meeting held (i) to discuss litigation when an action against or on behalf of the particular association has been filed and is pending in a court or administrative tribunal, or when the board of managers finds that such an action is probable or imminent, (ii) to consider information regarding appointment, employment or dismissal of an employee, or (iii) to discuss violations of rules and regulations of the association or a unit owner’s unpaid share of common expenses, that any vote on these matters shall be taken at a meeting or portion thereof open to any unit owner.” 765 ILCS 605/18(a)(9) (West 2004).

The Illinois Appellate Court, in the recent decision of Palm v. 2800 Lake Shore Drive Condominium Ass’n, 2014 IL App (1st) 111290 (2014), held that the board of directors of the condominium association violated the Act by conducting business at closed meetings, including discussion regarding association matters and soliciting input by email, canvassing board members by phone and deciding on matters in closed “working” sessions prior to presentation of the matters for a vote in an open meeting, and that such closed working or executive sessions, which are not open to unit holders, are impermissible. The facts of Palm may serve as a good guide to condominium board members and unit owners alike – to determine what may constitute a closed working or executive session.

Condominium associations should review both their bylaws and their actions to ensure compliance with the Illinois Condominium Property Act and to avoid the practice of conducting closed working or executive sessions, which are not made open to unit holders. If you have any questions regarding condominium board procedures, please contact:

Jeffrey M. Galkin at:

(312) 368-0100 / jgalkin@lgattorneys.com


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