| In the past two months, juries in two states have each | | | | considering a joint development effort or "partnering" |
| awarded over $30 million in damages in separate | | | | arrangement, and (6) potential investors or merger and |
| trade secret cases. A California jury awarded Hansen | | | | acquisition candidates. |
| Medical, Inc. $36.3 million in damages in a trade secret | | | | In addition to NDAs, a company will need to adopt |
| and breach of contract case against Luna Innovations, | | | | other steps to maintain the secrecy of the information. |
| Inc. in late April. More recently, a jury in federal court in | | | | These steps can include limited distribution, periodically |
| Atlanta awarded Lockheed Martin $37.3 million in a | | | | warning employees of the need to maintain |
| trade secret case against L-3 Communications Corp. | | | | confidentiality, storing sensitive information under lock |
| and a subsidiary. | | | | and key, password protection, and a host of other |
| Each of these cases may be appealed and will | | | | potential protections. |
| perhaps be settled. Nevertheless, the size of the | | | | Conversely, companies who are hiring employees who |
| verdicts alone provides some important reminders for | | | | formerly worked for competitors should take steps to |
| businesses. First, the verdicts show that trade secrets | | | | make sure that those employees do not bring their |
| can have enormous value to businesses. Companies | | | | former employer's trade secrets. This can be |
| holding trade secrets should make sure that they are | | | | addressed through employment agreements and other |
| protected through non-disclosure agreements ("NDAs") | | | | measures. |
| and other protections. | | | | Employees considering leaving their employer and |
| The extent to which NDAs will be needed varies from | | | | working for a competitor or starting their own business |
| business to business. However, businesses should | | | | should also take steps to avoid becoming involved in |
| strongly consider whether NDAs are needed regarding | | | | trade secret litigation. This can be as simple as having |
| the following categories of people or businesses: (1) | | | | a clear understanding (preferably written) with the |
| employees handling sensitive information or trade | | | | employer regarding what the employee can take and |
| secrets, (2) consultants exposed to such information, | | | | cannot take upon leaving, and then abiding by that |
| (3) actual or potential customers, (4) actual or potential | | | | understanding. |
| suppliers, (5) other companies with whom a business is | | | | |