Black Hats and White Hats: Cumulative Effect

(Part Two in a Series)

If push comes to shove and you are forced to file suit to protect your intangible assets, be sure that you are Wearing a White Hat.*

No one thing determines whether you are wearing a black hat or a white hat.  The color of your hat depends on the cumulative effect of your actions.

To increase the likelihood that you will be deemed a “White Hat,” remember what you learned in Sunday School as a child: do unto others as you would them do unto you.  Then behave consistently with that advice.

If you are a White Hat, you will try not only to protect your business, but also to treat your employees fairly and ethically.  You will not seek to eliminate competition per se, but will, instead seek to eliminate unfair competition.  You will not overreach, but will, rather, pursue the Least Restrictive Means Possible.  You will treat others the way you would want to be treated if you were in their shoes.

Consider how these principles apply in the following circumstances:

  • The scope of your protected information:  Not all information is of equal value.  If you seek to protect everything as “confidential,” “proprietary,” or “trade secret,” you diminish the value of your information that truly is protected.  Don’t be the boy who cried wolf.
  • The extent of your restrictions:  Not all employees are a threat to your business.  Adapt your restrictions based on the nature of the employee’s responsibilities.
  • The way you establish restrictions:  Did you inform your prospective employee that he would be required to sign a restrictive covenant before he accepted the job?  Or, did you surprise him with a restrictive covenant on his first day on the job?
  • The way you teach and follow-up:  Train your employees about their responsibilities to protect your intangible assets.  Your training and teaching is Always and Never Done. Train when you hire, train when you promote, and train in regular staff meetings.  Teach people what their obligations are, and then help them fulfill those obligations.
  • The way you treat the intangible assets of others:  This is where the Golden Rule truly comes into play.  If you engage in corporate espionage, poach employees from your competitors, and hack into your competitor’s database, don’t be surprised if your information is leaked out.  Neither your employees nor the court will be sympathetic to your claims of confidentiality.

The law of trade secrets is somewhat uniform across the country, but the law of restrictive covenants varies dramatically from jurisdiction to jurisdiction.  Seek the advice of experienced legal counsel in your jurisdiction.  Your counsel can help you develop and implement a legal strategy that is appropriate for your circumstances.  Retain the services of a competent security specialist to help you develop an appropriate plan for securing your information.  Whatever you do, start now.

If you start looking for your white hat after an employee leaves with sensitive business information, you will be too late.  The court will consider the cumulative effect of your actions, starting with what you do today.

*    “Wearing a White Hat” refers to the phenomenon in old time Western movies where the “good guys” wore white hats and the “bad guys” wore black hats.  When you “Wear a White Hat,” you encourage the court to rule in your favor and protect your intangible assets because you have behaved fairly and ethically.

Show Buttons
Hide Buttons