The Goldilocks and Three Bears Dilemma

Adopting Reasonable Measures to Protect Trade Secrets in the New Work Environment

ABSTRACT

The COVID-19 outbreak accelerated the growth of work from home at many enterprises. An important factor enabling collaborative work from home was the use of video conferencing, shared development project work tools, and other technology-driven resources for virtual enterprises. Given that many employees are choosing to remain working remotely from the office on at least a part-time basis, software companies need to reassess and update their policies and practices regarding the protection of intellectual property, particularly trade secrets. The phrase commonly used in the law in regards to trade secrets is “reasonable measures.” While certainly under the umbrella of security practices to protect against hacking and malware, reasonable measures to protect trade secrets often involve different, albeit, related objectives. There are numerous best practices and policies that warrant review and potentially adoption, but managers face the dilemma of choosing which policies and practices to adopt, since such policies and practices can be costly and create unnecessary constraints for employees, customers, and other stakeholders. Obviously, no one wants their organization to devote the time, money, and other resources to working with legal counsel to litigate misappropriation of trade secrets. Prevention is the preferred alternative. Managers, however, need to decide, “how much is enough” in regards to reasonable measures, what we label the Goldilocks Dilemma. This paper provides a review of reasonable measures that can be considered and used by software companies when assessing and adopting reasonable measures to protect their intellectual property, particularly trade secrets.

Steven R. Kursh, Ph.D., CSDP, CLP and Pratike Patel, BS, MBA

INTRODUCTION

Now that COVID-19 has largely passed, it’s time for software companies to take a step back to reassess their work environments and policies related to protecting their intellectual property (IP), particularly in regards to having “reasonable measures,” the criteria used with trade secret litigation. Most, if not all, software companies with staffs larger than a few people likely have some policies regarding their IP, for example, having Nondisclosure Agreements (NDAs) and provisions related to confidentiality in their agreements with third parties and employees. Larger software companies typically have a broad range of policies and measures in place reflecting their ability to make investments in security- related activities as well as other factors. Publicly- traded companies that do business outside of the United States must also implement policies related to IP and technology risks with international operations. No matter the size and scope of a software company the reality that many managers face is determining just how far to go with the adoption of policies and related reasonable measures to protect their intellectual property, particularly trade secrets. These reasonable measures may certainly fall under the umbrella of security policies to protect against hacking and malware, but reasonable measures often involve different, albeit, related objectives. The management challenge is further compounded by the expectations of many team members to continue, at least partially if not nearly 100 percent of the time, working remotely using collaboration tools and other technologies. The CISO (Chief Information Security Officer) or anyone tasked with developing and implementing polices to protect their organization’s IP generally has to be selective in what s/he does; only a small percentage of companies have the resources to do nearly everything possible to protect their IP. Not enough protections could potentially result in loss of trade secrets and issues with potentially customer proprietary data becoming public. Too many protections can slow down product development, inhibit innovation, and cause frustration among key personnel, partners, and customers.

 

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