FACEBOOK KILLS TRADE SECRETS!

In September 2010, a US court refused to restrain a former employee from

using information obtained from the company’s customer lists in competition
with her ex-employer.

The Court held that the customer lists were not entitled to trade secret
protection because:

1. the information was available publicly on social networking sites such

as Bloomberg, LinkedIn and Facebook;

2. there was no signed confidentiality or restraint of trade agreement

between the employer and the former employee; and

3. the employer had no security measures to protect the confidentiality

of the customer lists.

WHAT THIS MEANS TO YOU

While this is a US case, the principles regarding the protection of customer

information are applicable in Australia.

Australian employers should re-evaluate the accessibility and protection of their

proprietary information. The information has to be truly confidential to be
protected and has to be treated and valued as such by the employer.

This means that in order to maintain trade secret protection for customer lists,
customer information that is truly confidential, it is essential for employers to –

1. enter into properly constructed written agreements with their employees

that identify what is confidential information ( a trade secret );
2. defines how it can and can cannot be used;
3. makes it clear what form of disclosure (exceptions) is authorised;

Protection of trade secrets is a different issue entirely to restraint of trade post

employment and can and will be enforced by the Courts if done correctly.

Internal policy guidelines within your business dealing with trade secrets, access
to social networking sites, use of technology generally and the penalties for non-
compliance with these guidelines are all part of the framework of protection that
can be effectively used by you in these circumstances.
 DON’T WAIT TO HAVE THE PROBLEM BEFORE YOU ACT

Because of the complex nature of confidentiality and restraint of trade

agreements and the protection of proprietary information, you should consider
these issues with the benefit of legal advice. It’s time to look at your current
agreements, internal policies and guidelines so you can act to protect yourself if
you have the need in the future. Don’t wait for the problem to occur as it will be
too late to do anything as this US case demonstrates.

FOR MORE INFORMATION …

Contact Gavin Barnes at redchip lawyers on 07 3852 5055 or email

gavin@redchip.com.au.

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