6 Vital Steps When An Employee Steals A Trade Secret

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As a small business owner, you must trust your key employees with company information of various types. But what happens when one of these valued employees steals something like your client list, recipe, or plans for an upcoming product? What options does a company have to protect vital trade secrets from disgruntled employees? Here are six steps you may need to take.

1. Get Legal Counsel

Before you take any actions against an employee, you should consult with a reputable business lawyer. Employment law and trade secret protection can be minefields if not handled according to the laws. If you act too quickly, for instance, you might fall at risk of unlawful termination or fail to gather enough proof to make a case for infringement of company property.

2. Terminate the Employee

Most employers who discover an employee has stolen either tangible or intangible assets from them should terminate the individual to stop further problems. Following the advice of your attorney, document the situation and include evidence of wrongdoing in case you are accused of wrongful termination. No matter how stressful or emotional this is, follow established proper procedures for termination. 

4. Write a Demand Letter

Many civil law cases start with something known as a demand letter. Demand letters are formal statements of your claim and request for the other party to take some action to rectify the matter outside of court. In this case, the letter would most likely demand the return of the stolen property or data and immediate cessation of any use of it. 

5. Seek an Injunction

If the demand letter doesn't get a sufficient response, you may need to seek an injunction from the court. Injunctions are court orders to do or not do a specific action. In this case, that action would be to stop using the stolen information or giving it to anyone. Some injunctions can be obtained through an expedited process if needed. 

6. Sue for Damages

The most drawn-out step you may need to take is to sue the individual in civil court for economic damages. This is often based on elements of employment law, such as violation of an employment agreement or violation of the person's fiduciary duty as an agent of the employer. You and your attorney will calculate the economic harm caused by the theft as well as any additional damages for things like reputation damage. 

Where to Start

As mentioned, the first step after a suspected trade secret theft is to meet with a business lawyer in your state. They will advise you on the right future steps and even act fast to minimize harm to your company.

To learn more, contact a firm like Schoch & Schoch.