Uniform Protective Measures For Information Assets Can Put Trade Secrets At Risk

Many companies believe that their information assets include trade secrets. 

But, some of those companies do not reasonably protect those potential trade secrets. Such a deficiency has significant consequences: an asset cannot be a trade secret absent reasonable protective measures.

A recent U.S. district court opinion drove that point home, and, importantly, did so after comparing the plaintiff’s protective measures for its alleged trade secrets to its protective measures for mere internal corporate information: “Defendants assert that the security practices [plaintiff] Opus employs in addition to confidentiality agreements are normal business practices insufficient to meet the statutory definition of trade secrets. This Court agrees.… Here, Opus does nothing to differentiate its protective measures for the alleged proprietary trade secrets from those imposed on any other corporate information. Opus relies on Covenant Aviation Sec. LLC v. Berry, 15 F.Supp.3d 813, 818 (N.D. Ill. 2014) (Lefkow, J.), to support its position. In that case there were allegations that the plaintiff ‘treats this information as highly confidential’ in addition to having confidentiality agreements. There is no similar allegation here that the information is treated as highly confidential or any more confidential than all of Opus’ internal information.” Opus Fund Services (USA) LLC v. Theorem Fund Services et al., N.D. Ill., March 5, 2018, Case No. 1:17-cv-00923,  Docket No. 68, pp. 5, 6.

So, the takeaway: companies that uniformly protect their information assets may want to rethink that approach.  That approach may be convenient, but it can deprive an asset of trade secret status and, in turn, result in significant competitive consequences.