Construction Law

How to Protect Your Trade Secrets featured image

How to Protect Your Trade Secrets

Protecting trade secrets and confidential information is crucial for construction professionals. This is why many of our clients consult with a Tampa construction lawyer to ensure that they have a confidentiality agreement in place that protects their best interests. Often referred to as a non-disclosure agreement (NDA), this agreement can either be implemented into an employee contract or act as its own contract with a vendor. As we will discuss throughout this article, implementing an NDA ensures your most protected, valuable information remains private and secure. For all of your construction contract needs, consult the experienced Tampa construction lawyers at Cotney Attorneys & Consultants.

Construction Trade Secrets You Should Protect

Although NDAs are common in many other industries, they are one of the most effective ways that construction firms can protect their most valuable information. This agreement also provides firms with a legal backdoor to take if the agreement is violated. NDAs are not only prevalent in a variety of industries, but also involve a unique array of trade secrets related to a business. Specifically, for construction, a firm wants a confidentiality agreement in place to protect the following types of confidential information:

  • Business Models: With many funding opportunities out there, construction firms need to protect all relevant information related to their bid proposals. Any information leaked about your company’s business opportunities can impact potential funding.
  • Inventions: The construction industry is filled with amazing inventions that both simplify and enhance the way professionals take on projects. Whether your company invented a new tool, type of material, piece of equipment, design, or approach to projects, you should consult a Tampa construction attorney to successfully protect any invention that sets you apart from your competition.
  • Client Information: Success for a construction firm includes building key relationships with clients, suppliers, manufacturers, and other construction professionals. Whether it’s material pricing, the salary of the workforce, pricing for scope of work, or a variety of important financial information related to projects, you never want a competitor to undercut you with inside knowledge of your rates.
  • Private Access: When working on a project, several critical members of the project need to be privy to the important details related to the scope of the work. When these professionals are provided access to confidential information, the firm needs to be ensured that the information remains private to the entities that were allowed access.

Whether it’s a building process, design, customer lists, pricing information, or even relevant corporate records like profit margin totals, our Tampa construction attorneys can create an NDA that clearly and specifically details any confidential information that you want to keep private. Moreover, there will be enforceable legal consequences if this information is misappropriated.  

Implementing an NDA

As we discussed above, NDAs are created to protect sensitive information. When valuable, private information is leaked to the public, it negatively impacts the company that owns this trade secret. Next, our St. Petersburg construction attorneys will discuss how to successfully implement an NDA to ensure that your trade secrets remain protected. It may come as a surprise to many construction business owners that trade secret protection can only be achieved through an ironclad contract. Unlike copyright and patent laws, you cannot register trade secrets with a government agency or third party organization.

The goal of implementing trade secret protection is to clearly define the intellectual property, the responsibilities of any party that is allowed access to this confidential information, and the timeline of how long this information remains exclusive to its owner. Here are three steps to take in order to successfully implement a trade secret policy:

  1. Define the Trade Secret: You can’t protect your most valuable trade secrets unless you identify what exactly should be protected. Trade secret protection should be exclusive to your company and showcase the reasonable measures you’ve taken to protect this confidential information. Moreover, this information should impact your company financially if it were to be misappropriated.
  2. Create a Contract: The next step is to develop the policy itself. As we have stated in the past, this written agreement makes it clear what confidential information cannot be shared. It also defines when exactly it is okay to share this information. Lastly, it establishes that you will not tolerate employees that violate this agreement and are willing to take legal action against parties that are in violation.
  3. Internal Protection Tactics: It’s important that a company not only define their trade secrets, but also show that they made an effort to protect these secrets. Here are some ways companies can showcase this:
    1. Label all protected documents “confidential”: clearly mark all documents that the company considers confidential.
    2. Store documents: don’t allow confidential documents to be copied or retained by employees that don’t need direct access to them.
    3. Designate one employee as a trade-secret compliance officer: this senior-level employee will be responsible for all matters related to protecting confidential information.
    4. Educate your workforce: it’s critical that your workforce understands the policies related to protecting trade secrets, including whether or not they can access smartphones on the jobsite.
    5. Update your handbook: providing periodic updates to the trade secret policy keeps everyone in the know while reinforcing the purpose of this policy.
    6. Include training programs: for recent hires, it’s important that you have a section that includes prohibiting confidential information taught in training courses from being shared.
    7. Track information: your company should know where confidential information is stored, and you should control who can access your computer system.
    8. Select access: only employees that need to know trade secrets should be provided access to this valuable information.
    9. Termination of employment: always stress the consequences of violating this policy under any circumstances.
    10. Exit interview: when employees are leaving the company, they need to return any relevant material related to trade secrets and be reminded that their agreement is still active
  4. External Protection Tactics: While it’s important to define the trade secret policy, establish this policy in writing, and train everyone at your company on the policy and its restrictions, it’s also important that you protect any third-party threat from accessing confidential information. Here are some tips to successfully do this:
    1. Locking up: take important security measures like filing important documents in a safe or relocating them off-site where they can’t be accessed.
    2. Restrict access: prohibiting tours of your facility or jobsite can limit the chances of trade secrets being taken off the premises.
    3. Create NDA’s: NDA’s should be in place for work with any vendors, construction professionals, and any third party entities.
    4. Do not disclose: having a contract in place is extremely helpful, but construction companies also need to maintain secrecy with the other parties they work with. In other words, only share what’s necessary.
    5. Diversity in vendors: don’t rely too much on one vendor. By outsourcing to several professionals, no one business knows exactly how you complete your process.
    6. Review their background: when it’s necessary to share confidential information, do some research of the other professional’s background to ensure they’re trustworthy.
    7. Keep records: when you do share confidential information, make sure you mark these documents and keep a record of exactly when this information was shared with the other party. Remind them of the confidentiality of these documents when sharing.
    8. Consistency: there should be a written confidentiality agreement in place defining the ownership of the trade secret. There should never be an exception to this rule, including when you work with another business that you’ve trusted for years.

Examples of NDA Leaks

Although your company may perform all of the above tasks, there’s always a chance that your trade secrets can still be compromised. Here are three examples of how trade secrets are exposed:

  1. Accidentally Sharing Information: One common way that an NDA agreement is violated is when one employee unintentionally releases this information to the public. This can happen as easily as an employee taking a picture of a jobsite, putting it on social media, and not realizing that there was confidential information in the picture. Another example could involve two co-workers on their lunch break talking about a project if one worker realizes that the other isn’t privy to certain information about a project. Again, this is why it’s critical that all employees are trained on trade secret policies and are aware of the serious penalty for violating these policies.
  2. Former Employees Misappropriation: When a valuable senior member leaves your construction firm, they will have knowledge and experience that stretches beyond just documents in a file or on a computer drive. Although you can’t erase this information, you can at least keep it under control through several legal devices that help protect trade secrets. With a confidentiality agreement in place, no former employee can start their own business with your process or profit from sharing your trade secrets with a competitor.
  3. Stolen Information: Even when you do everything in your power to prevent trade secrets from being stolen, some competitors may still find a way to access your confidential information. A competitor could breach your computer system or take your trade secrets by other means. If your trade secrets are compromised, our Clearwater contractor lawyers can determine the best legal action to take to mitigate the damage of this illegal action and help you seek legal recourse.

Consult a Construction Attorney

When you’ve worked hard to build a successful construction business, the last thing you want to experience is any type of fallout from another party stealing your trade secrets. The best way to prevent this from happening is to create a comprehensive contract that clearly defines your trade secrets and the obligations of the party accessing this information. With a contract in place, it establishes that the party receiving this information acknowledges that the information is secretive and that its value would be compromised if improperly shared. For all of your construction contract needs, consult our knowledgeable and experienced Clearwater construction lawyers.  

If you would like to speak with a legal professional dedicated to St. Petersburg construction law, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.