How To Handle Proprietary Information In The Workplace

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Protecting your company’s data, intellectual property, trade secrets, technology and inventions, etc., is of utmost importance. This proprietary information is what sets your company apart, and it is often what makes you successful. Learn how to handle proprietary information in your workplace.

Key Takeaways:

• Proprietary information is often considered the trade secrets of a business and must be kept confidential to protect the company.

• Not all confidential information is proprietary, and it pays to know the difference.

• Protecting proprietary information starts with identifying what it is, limiting who knows the information, and having nondisclosure agreements in place.

• NDAs are legal agreements and should be written up or reviewed by an attorney for adequate protection.

What Is Proprietary Information?

Proprietary information used to be collectively known as a company’s trade secrets. While that’s an outdated term, it’s a very apt description. The things that a company creates by itself and considers a secret that helps them trade (or sell) in the market. That’s basically what proprietary information is.

Proprietary information is sensitive information that must remain confidential to protect the company and its product, service, or business. Some examples of proprietary information include:

• Drug development

• Compounds

• Recipes

• Trade secrets

• Technology

• Processes

• Data

• Ideas

• Techniques

• Inventions

• Authored works

• Formulas

• Product development plans

• Customer lists

How to Protect Proprietary Information

So how does a business go about protecting its private and confidential information? The first step is identifying what information is proprietary. For some companies, this is easy because they do just one thing. Other companies must perform regular audits to see if there have been any changes.

Once your proprietary information is identified, it’s time to single out employees who have access to that information. Not everyone in the company needs to know all of the company secrets. Key personnel needing this information must be properly vetted to determine if they’re trustworthy.

The next step is to create your company nondisclosure agreements (NDA). While not everyone in the company will have access to all of the company information, it’s a good idea to have some type of NDA for all employees – even freelance and contract employees. All NDAs should be legally binding, and professional legal help is encouraged to ensure the language is correct and inclusive.

Types of NDA

There are basically two types of nondisclosure agreements; one is a one-way NDA, and the other is a mutual NDA.

The one-way NDA is designed to protect any information you share about your proprietary information, and it must be signed by the person you share that information with. For instance, your company is approaching an investor, and you need to tell them what you do and why they should invest with you. What you say is protected. Any information or advice they give you is not protected.

In a mutual NDA, both sides of any discussion about proprietary information are private. This is a more common NDA because it’s more inclusive, and there’s less opportunity for misinterpretation.

Another type of agreement is a disclosure agreement, which you might see at the doctor’s office. A disclosure agreement is basically a contract that allows someone to break the NDA but only in a specific way. For instance, your doctor will ask your permission to disclose medical health information to your insurance company.

What If Someone Violates Your NDA

If someone has violated your NDA, it’s best to get an attorney involved immediately. If your NDA was crafted by an attorney, you no doubt have legal repercussions outlined in the NDA. This lets the individual know what they would be facing if they broke the contract.

There are several steps to take, and your claim against the individual will most likely go to court, even if you settle in the long run. Their punishment will be monetary.

What If You Don’t Have an NDA

If you don’t have an NDA yet, an employee went to a competitor and told them your trade secrets; in this case, you can still take legal action. Theft of trade secrets is called misappropriation. The legal battle to receive compensation will be more difficult than it would be if there were an NDA, but it’s still possible.

Confidential vs. Proprietary Business Information

There is often a bit of confusion about confidential information and proprietary information. In most situations, all of it is meant to be kept private, but there is a difference. Proprietary information is not only secret, and it is owned or the property of one party – usually the business. There is also an economic value attached to proprietary information.

For example, consider a business that keeps its onboarding practices confidential and expects all employees to respect that and not discuss how they were onboarded. In most situations, this is not proprietary; it’s just confidential.

On the other hand, a business that has come up with a formula for a coating for cereal that keeps it crunchy in milk has a proprietary idea. This formula is top-secret and guaranteed to earn the company money from cereal companies who want to use it.

The formula and even its existence is proprietary information and must be kept secret by all employees or risk financial repercussions for the company and a potential lawsuit as an individual if they’ve signed any non-disclosure agreements.

Why Is Protecting Proprietary Information Important?

The above example provides an illustration of why proprietary information must be kept secret. These confidential pieces of information can be the key to a company’s success or to losing its edge and letting another company win with their technology.

Not protecting proprietary information puts your company at risk, an unnecessary risk. Your proprietary information is quite possibly your most critical asset.

Proprietary Information FAQ

1. Is all information in my company proprietary?

   No, not all information within the walls of a company is considered proprietary. In fact, not all confidential information is proprietary. Proprietary information is tied to the way your business operates or the products it makes and has financial value.

2. Do I need an NDA?

   Yes, most businesses would benefit from some form of NDA; whether you’re protecting proprietary information or you have confidential practices, you want to be protected. It’s a good idea to talk to an attorney about your individual NDA to learn what you can and cannot protect. The attorney can then help you craft the most protective NDA possible.

3. If I don’t have an NDA, can I still protect my trade secrets?

   Yes, in most situations, your trade secrets are automatically protected, but it can be more difficult to prove and take legal action without contractual protection. Remember, once your secrets have been spilled, it can be difficult, if not impossible, to recover. It’s also not likely that any financial awards from the court can make up for your potential losses.

Final Thoughts

Protecting your company’s proprietary information should be a top priority for you and for everyone in the company. These bits of data are often referred to as trade secrets, and they help you get ahead and stay ahead in business.

The loss of confidentiality around proprietary information can be devastating to a company and can ultimately see them facing financial ruin as other businesses take that information and use it to capture your clients. Legal counsel can help you create nondisclosure agreements that will add a layer of protection to your business and its success.

References

1. Securities and Exchange Commission – Proprietary Information

2. Nondisclosure Agreement – NDA Violation

Author

Kristin Kizer

Kristin Kizer is an award-winning writer, television and documentary producer, and content specialist who has worked on a wide variety of written, broadcast, and electronic publications. A former writer/producer for The Discovery Channel, she is now a freelance writer and delighted to be sharing her talents and time with the wonderful Zippia audience.