Trade secrets are a massively important form of intellectual property. And they are stolen or misused far more often than you may realize. An employee might swipe your customer as he leaves for a new job. A vendor might use your business strategies to help one of your competitors. A joint venturer might exploit your technology for its own benefit.
When someone misappropriates your business’s trade secrets, it is critical that you take swift, decisive action. Though some cases can be resolved without court intervention, legal action may be needed to prevent devastating harm to the business and recover its losses.
To prevail in court, a trade secret plaintiff must first prove that the information was, in fact, a trade secret under the law. This can be more challenging that it seems. How does a company show that its information counts as a trade secret entitled to protection?
Proving the Information is Protectable as a Trade Secret
First your business will need to prove that its information is protectable. In many cases (not all) this will be the easy part. Pretty much any valuable information is eligible for trade secret protection, provided it is robust enough and has not been publicly disclosed.
The following are examples of information that might qualify as trade secrets:
Proving the Information Has Competitive Value
Though any type of information can qualify as a trade secret, it must have economic value. And this value must derive from its not being known or discoverable by your competition. Simply put, trade secrets are secrets that your competition could profit from knowing.
To determine whether information meets this standard, courts look at the value it has to the owner and competitors, the effort and money that went into developing it, and how difficult it would be for others to develop the same information, among other things.
Proving Your Company Took Steps to Ensure Secrecy
To qualify as a trade secret, your business must, well, keep it a secret. More specifically, an owner must prove it made reasonable efforts to protect its information from disclosure. This seemingly simple point is often hotly contested; it can make or break a trade secret case.
The measures each company takes will vary. To take a famous example, it is said that the formula for WD-40 is locked away in a bank vault that can only accessed by select individuals. Though this particular method will not be appropriate in every case, the concept is right: You need to limit access and set up barriers against disclosure.
Some measures to consider to protect your business information include the following:
Though an NDA is not the only way to protect your information, putting an NDA in place is one of the clearest and most easily enforceable ways to ensure confidentiality. An experienced trade secret attorney can craft NDAs tailored to the specifics of your business and provide guidance in putting other appropriate, enforceable measures in place.
Enforcing Your Trade Secret Rights in Court
Like most states, Michigan has adopted its own version of the Uniform Trade Secrets Act (UTSA), which prohibits parties from wrongfully disclosing or using the trade secrets of another. Federal law also provides a cause of action for trade secret misappropriation and includes enhanced remedies. If you believe that someone has misappropriate your business’s trade secrets, you should take immediate action. Time is of the essence.
Sometimes it’s best to start with a cease-and-desist letter demanding that the target stop using your information and return or destroy all copies in his or her possession. Other times, it will be necessary to file a lawsuit right out of the gate. Many trade secret cases begin with a motion seeking an immediate injunction to halt any further misappropriation.
Contact the Premier Trade Secrets Law Firm in Michigan
Trade secrets are a precious asset. Businesses have been damaged and destroyed when their secrets fell into the wrong hands, whether through corporate espionage or a once-trusted employee or business partner. Take the necessary steps now to lock down your hard-won trade secrets. And be prepared for swift action if someone steals them.
At Maxwell Goss Law, we advise businesses on all aspects of intellectual property law and represent businesses and individuals in enforcing their rights. Contact us to schedule a no-cost strategy call to discuss the right steps to protect your business’s hard-won trade secrets.
Maxwell Goss Law Supports Birmingham Local History Project
Over a century after their deaths, details on the lives of two former slaves who settled in Birmingham, Michigan, and became esteemed members of the community were recently discovered. George and Eliza Taylor, deceased in 1901 and 1902, respectively, were the first African-Americans to own property in Birmingham. After escaping slavery in Kentucky through the underground railroad, the Taylors purchased a home on Bates Street in 1893 and became active members of United Presbyterian Church.
Unfortunately, the Taylors were buried in unmarked graves and their story was long forgotten. George Getchman, the historian who discovered the Taylors’ story, has joined with others to raise funds to sponsor a grave marker reading, “Born in slavery; died free in Birmingham.”
Maxwell Goss Law, based in Birmingham, has donated $500 for the Taylor Monument.
The firm’s owner, Maxwell Goss, learned of the effort through personal connections. “My father forwarded me an article about the Taylors and noted that they had been members of his church,” Goss said. “When I read it, I saw that the ‘local historian’ was my longtime dentist, whom I knew from our conversations to be involved with Birmingham history. And since my business is in Birmingham, it seemed only fitting to contribute to this worthy cause.”
According to The Oakland Press:
Contributions to the Taylor Monument Fund can be made online through a secure payment service with the Birmingham Museum/City of Birmingham here.
Checks can be made payable to “Friends of the Birmingham Museum-Taylor Monument Project” and mailed to: Birmingham Museum, 556 W. Maple Road, Birmingham, MI 48009.
Maxwell Goss Law brings forceful advocacy and creative solutions to high-stakes business disputes, with a focus on trade secret, non-compete, intellectual property, and shareholder litigation. Based in metro Detroit, the firm serves clients throughout Michigan and appears in courts nationwide.
The coronavirus crisis has led to a surge in remote work. And even as states look to reopen, many businesses may find long-term benefits to prolonging this arrangement. If your company has employees working from home, you need a remote work policy—and you need it in writing.
Need to start creating a work from home (WFH) policy right now? Go here to get access to my free checklist to help you put together this important document for your business.
Two Reasons Your Business Needs a Work From Home Policy
You may think that it’s enough to communicate your expectations verbally or with ad hoc email messages. But it’s better to formalize your expectations in a written WFH policy. Doing so will not only yield practical benefits but can also provide important legal protections. Let me explain.
1. Practical Benefits
As many businesses are finding, there are a host of management and workflow issues that come up when employees work in a remote work environment. Questions include:
Implementing written protocols on these important questions will benefit your business. It’s one thing to convey your expectations informally. It’s another thing—and usually more effective—to have a written policy that team members can keep on hand for reference. This will make things simpler for them and will give management an objective source to refer back to when issues arise
2. Legal Protection
Businesses should understand that a whole raft of legal issues can arise when employees work from home. A written WFH policy can help protect your business. Here are three examples.
First, what if your company has a data breach? If your company experiences a data breach and customer data is exposed, your company could face potential liability. In the event of legal action, it will be critical for your business to be able to give evidence that it takes appropriate measures to keep customer data safe. Woe unto the business that must explain that to a court it had employees accessing customer data from home but had no formal data protection protocols in place. A business will likely fare better if it has provided employees with a solid, written work-from-home policy that carefully addresses data security. A written policy isn’t a cure-all, but it is a key part of any data security plan.
A second issue is trade secret misappropriation. Even the most trusted employee can become a misappropriator of trade secrets in the future. It happens all of the time, unfortunately. Six months, a year, two years down the line, that trusted employee could move to a competitor and start using confidential customer information, technical data, or other trade secrets obtained from your company. If legal action becomes necessary, you will need to prove that the employee acted improperly. You will also need to prove that your business took reasonable steps to protect its valuable information. Just to take one example, you don’t want anyone to be able to say that your business permitted employees to access company information on a personal computer or store information in a personal Google Drive or Dropbox account. Implement a written policy that states exactly when, how, and and for what purpose company information may be used.
A third impacted area is wage and hour law. It is important to understand that all of the same employment and wage and hour issues that arise in an office setting can arise in a remote work environment—sometimes in unexpected ways. Just to take one example, overtime issues can arise when employees work from home. In the event of an overtime dispute with an employee, your business will be in a better position if it is armed with documented procedures in place for recording hours worked from home.
A written WFH policy will not solve every problem, but it can be one valuable element in a business’s overall strategy for maximizing the value of remote work while protecting itself from legal issues that may arise.
Free Work From Home Policy Checklist
Remote work isn’t going away. Even after the pandemic is over, many businesses will continue to have employees working at home. Your business should consider taking this opportunity to get its ducks in a row. And I have a resource that can help.
Go here and I will be happy to send you a free copy of my Work-From-Home Policy Checklist. This document outlines a number of important points to consider including in your WFH policy.
The COVID-19 emergency and resulting shutdown are resulting in job losses in Michigan and nationwide. No industry is exempt. Retail, travel, real estate, and even healthcare are just a few of the sectors in which workers are taking a hit.
One consolation is that some employers are offering severance packages. This means that employees are being offered financial compensation and in some cases benefits upon being laid off. If you’ve been offered a severance, you need to understand a few key concepts right away:
A successful severance negotiation can maximize your payout and limit potentially burdensome restrictions that your employer may wish to impose on you as you leave your job.
Terms of a Separation Agreement
If your employer offers you a severance package, this is probably not out of the goodness of its heart. Your employer expects something in return. You have a limited amount of time to review and respond to a severance agreement offer. Use that time to get clarity on any requirements and to fully understand what you are agreeing to. It may make sense for you to consult an attorney.
Here are some items you may run across in a separation agreement:
Your Employer May Want a Release of Liability
A severance package typically includes a release of liability. Essentially, you are waiving your right to sue the company in the future.
Why would an employer want you to sign a release? In some cases, the employer may be aware of potential legal liability. Perhaps you were the subject of discrimination or harassment, and the company wants to prevent you from pursuing your claims. In other cases, the employer may simply want to insure against a future lawsuit based on some unknown or undisclosed legal claim.
Either way, you are giving up something potentially very significant when you agree to release liability. You should weigh this very carefully against whatever compensation the company may be offering you in return.
In particular, you will want to understand exactly what you are releasing the employer from. The terms of the release may be broad or narrow -- i.e., all liability or only some. Moreover, you should consider how the release might make you vulnerable. For example, if your employer defames you or releases false information about you in a reference, would you have any legal standing to sue them? Finally, remember that signing a release could preclude you from joining any future lawsuits brought against the company by others.
This does not mean you should not sign the release. In some cases, it may make sense to do so. But an employee should not sign the release unless he or she understands what is being released and is satisfied with what the employer is offering in return.
Your Employer May Want to Limit Your Career Options
Severance agreements sometimes also include various career-limiting provisions. Employers include these to improve their own competitive position -- but don't forget that these may come at a cost to your career options. Examples include:
Again, you will want to weigh the agreement carefully before signing it. While accepting severance pay may be appealing -- especially in these challenging times -- ask yourself whether you can live with the restrictions. It is vital for you to understand is how severely the restrictions impact your ability to get a new job and what limitations they impose on your career path.
Points to Keep in Mind During Severance Negotiations
A severance package is not a parting gift. It is an agreement that should -- if negotiated properly -- benefit both parties. Arm yourself with an understanding of what you are giving up and what you are getting in return. Ask yourself:
Remember, a separation agreement is just that -- an agreement, a contract. It will be legal enforceable against you. While you should be mindful of any deadlines, resist the temptation to rush. And do not be afraid to demand your employer's attention to discuss and negotiate any provisions that concern you.
Your payout will depend on a variety of factors including your tenure with the company, the company's financial situation, and the strength of your bargaining position. As you negotiate, keep in mind that employers that have downsized due to COVID-19 might have limited options to increase severance pay. But that does not mean you should not ask. Even when more money is not on the table, you might be able to negotiate an increase in benefits or narrow the scope of any non-compete, non-solicit, or non-disparagement provisions.
Hire a Lawyer to Negotiate Your Severance
In the end, it's your choice whether to accept the severance package your employer offers. You want to leave your job well, but you also want to protect yourself. As you consider your options, don't go it alone. A knowledgeable attorney can help you understand the implications of the agreement terms. Equally important, an attorney skilled in negotiation may help you get a better deal.
Businesses across the state have been hurt by the coronavirus pandemic. Many are struggling to keep the lights on, while others are closed forever. The good news is that help is available.
You may have heard about the Michigan SBA loans offered as part of the federal government’s Paycheck Protection Program. A Michigan small business loan is a start but it may not be enough. COVID-19 Michigan business resources are also available through a number of privately funded grants.
Here are eight private grants that may help your Michigan business.
Facebook has announced that it will give a total of $100 million in cash grants and ad credits to businesses impacted by COVID-19. You must have been in business for more than a year, be located near an active Facebook business location (Detroit is one) and have between 2 and 50 employees. There is no currently posted deadline.
You can find more information about the Facebook grants here.
Salesforce is supporting businesses with individual small business grants in the amount of $10,000. The company has committed to giving $5M.
Applications have not yet opened but you can go here and sign up to be notified when it begins to accept applicants.
The Quicken Loans Community Fund and Gilbert Family Foundation are providing $1.2 million to the city of Detroit. The investment will include donations to the community as well as $450,000 that will be offered as flexible investments for small businesses and existing grant partners. These grant partners may be a source of funding for your business.
You can learn more about the Quicken Loans flexible investment program here.
Google Ads Credits
Google is offering ad credits for small and medium-sized businesses to offset the burden of COVID-19 financial issues. Google is giving $340 million in ad credits that can be used for the rest of the calendar year. You may be eligible if you have advertised directly with Google and had an active spend for at least 10 out of the 12 months of 2019. Google will begin distributing the ad credit in phases in late May.
Go here to learn more about Google’s free ad credit program.
GoFundMe Small Business Relief Fund Initiative
GoFundMe is partnering with Yelp!, GoDaddy, and Bill.com to support small businesses. These companies are facilitating the donation of money in a Small Business Relief Fund. These donations will be matched up to $500 for qualifying businesses. To qualify, you must raise $500 on GoFundMe. They are still building partnerships and have not set a deployment date for this.
Click here for the information request form from GoFundMe.
Sara Blakely of Spanx
Female entrepreneurs can benefit from a unique offering of $5 million from Sara Blakely, the founder of Spanx, to help small businesses. Blakely intends to give $5,000 to 1,000 small businesses that are owned by women. She is distributing this money through GlobalGiving.
Applications are not yet open for this. Go here to sign up to be notified when applications open.
Greater Grand Rapids Chamber Foundation
The Rapid Response Fund is specifically for residents of Kent County, Michigan. You may qualify if you have a small business with 5-25 employees. The goal is to provide funds in lieu of access to federal relief money. The Greater Grand Rapids Chamber Foundation is offering short-term grants that range from $5,000-$10,000.
Go here to learn more.
ID Ventures: Early Stage Tech Company Support
A tech startup stabilization fund is supplying $3 million in investments and loans for Michigan tech startups. This is being administered by ID Ventures. You may be eligible if you are a tech-based company with a headquarters in Michigan and have fewer than 50 employees. Go here to read about this opportunity. Applications for this money will close on May 1.
Click here to apply.
More Resources for Small Businesses: Detroit Metro
Private grants are a great option for your small business. However, don’t forget that there are loan and grant programs also provided by state and local governments and public partnerships. If you are in or near the Detroit Metro area, the following resources may be helpful to you:
Updated Executive Order Extends and Slightly Relaxes Restrictions on Michigan Businesses and Individuals
Michigan Governor Whitmer has issued a new stay-at-home order, Executive Order 2020-59, that supersedes, extends, and modifies Executive Order 2020-42. For ease of reference, you can find a redline comparing the new order to the prior iteration HERE.
Governor Gretchen Whitmer's new stay-at-home order, issued last night, imposes stringent new restrictions and adds certain clarifications for individuals and businesses. If you'd like to see the changes for yourself, I generated a redline comparing the new order (EO 2020-42) and the prior one (EO 2020-21). Get it HERE.
Lawsuits relating to the coronavirus crisis are starting to bubble up. There are going to be a lot of these.
A wrongful death suit has just been filed against Walmart by the brother ow Wando Evans, 51, an overnight stock and maintenance associate near Chicago who died two days after being sent home from the store. Details here.
The complaint alleges that Walmart failed to respond and share information about COVID-19 symptoms among several workers. It also alleges that Walmart didn't provide adequate safeguards for employees.
This lawsuit has implications for businesses of all sizes. Time to get your legal houses in order.
Remote work raises a host of management and workflow issues for businesses. It also raises data security, confidentiality, overtime, and other legal issues. If your business doesn't have a written work-from-home policy, it needs one now. Get a free checklist for creating your own HERE:
Modern technology makes it all too easy for employees, vendors, hackers, and others to make off with your business's trade secrets. In this video, I outline some quick tips for handling these valuable business assets.
This legal blog is written by attorney Maxwell Goss. Max practices business litigation, with a focus on non-competes, trade secrets, shareholder dispute, and intellectual property.