Guest post written by Naomi Fine
Naomi Fine is CEO Pro-Tec Data, and the author of Positively Confidential: 10 Proven Steps to Protecting Confidential Information, Private Data, and Intellectual Property in Today’s Interactive Business World.
I'm not one to encourage people to freely share their company's secrets. Quite the contrary: for more than 25 years I've been assisting organizations to protect their confidential business information. I help people strike the right balance between openness and security. To achieve this, all stakeholders who work with company-sensitive business information must be able to talk about the company's secrets. That doesn't mean revealing them; it means being able to understand and articulate what, specifically, is confidential, and to distinguish that from other, non-confidential information.
Do you know which business information your company holds as confidential? Likely what comes to mind are product ideas, unique processes, customer relationships, marketing plans and financial details. While these types of information are typically deemed confidential, identifying them only in general terms could get you and your company into trouble. Without more delineation, a recipient may be unable to differentiate which of the product, process, customer, marketing or financial information she receives from you is, and is not, confidential.
Company A learned this lesson the hard way after hiring a consultant to develop their marketing collateral for a trade show. The consultant's assignment included interviewing customers to develop case studies that describe how customers, identified by name, use, and benefit from, Company A's products.
A few months after the trade show, Company A discovered that its biggest rival, Company B, was presenting case studies describing disappointed Company A customers, with detailed descriptions of Company A’s product deficiencies. Company A's investigation of the matter concluded that its consultant had revealed to Company B information he obtained from his Company A customer interviews.
Company A confronted the consultant, accusing him of violating his nondisclosure agreement (and being unethical). The consultant admitted to understanding that Company A wouldn't want this negative information to be available to Company B (or to anyone outside Company A). Yet he also claimed that the information he obtained from his Company A customer interviews was not confidential. He told Company A that because the case studies in their marketing collateral were made available at the trade show without restriction, they could not be confidential. And, if the positive information was not confidential, he reasoned, the negative information he heard during those same customer interviews was also not subject to his NDA restrictions.
Does this seem too far-fetched to be relevant to you? It is not. Simple misunderstandings result in big, damaging losses of confidential information every day. Often, the cause is a failure to talk about company secrets; that is, to talk about what is, and is not, company confidential.
I'm frequently called upon as an expert witness in trade secret litigation. Many of these cases are heart-breaking because of their recurring theme: someone had access to a company's information that they took and used for a purpose that was not in the company's best interest. But the person didn't know that the information was confidential, or somehow reasoned that it was not, even if she signed a confidentiality agreement.
In some cases, the material taken is clearly labeled with a confidentiality label, such as "Company Confidential." If the defendant can show that this same information, perhaps while still clearly marked confidential, was also available on the Internet, or at a public conference, or other public forum, the company will lose its lawsuit, after having lost its valuable information, tarnished its reputation, and diminished its competitive advantage. The company loses because a judge or a jury is not convinced that the company itself knew what was confidential. The company's failure to clearly identify, consistently, and without contrary actions, the information it claimed to be trade secret, may be all the evidence a judge or jury needs to conclude that the company did not establish trade secrets.
If you label materials "Company Confidential," and then make them freely available, you contradict the label, and make yourself vulnerable to a claim that your secrets are not really secret. Your lack of clarity or consistency makes it unreasonable to expect others to be clear and consistent, which undermines your company’s proprietary rights to the information.
Confidential information and trade secrets exist only if they are subject to reasonable efforts to protect them. Distinguishing sensitive information is the most fundamental of its safeguards. Only if you understand what is confidential, and express that understanding unequivocally to all those whom you allow access, can you expect that it will be treated with care. Secrecy measures, including alerting recipients to the sensitivity of disclosed information, must be applied consistently because one uncontrolled exposure can negate all other safeguards.
I encourage you to describe precisely which of the information you make available to others that you regard as confidential. If you do not, those who receive that information may assume it is non-confidential, as did the consultant in the example described previously. It is dangerous to presume that others have the same understanding about what is sensitive and what can be freely shared. Company A should have told the consultant that all of the information he obtained from the customer interviews was confidential, and subject to the consultant's NDA, except for the specific case studies that were approved for the trade show marketing collateral. If Company A had communicated this to the consultant, before any customer interviews were conducted, Company A might have saved itself from an expensive, painful, and embarrassing loss.
Communicating to recipients about confidentiality doesn't have to be a daunting task. It can be a conversation, or an e-mail, that starts with the simple invitation "let's talk about our company's trade secrets."
