4 ways startup founders can prevent trade secret lawsuits

On Behalf of | Oct 3, 2017 | Blog |

4 ways startup founders can prevent trade secret lawsuits

Lawsuits from an old employer can add up to expensive legal problems for a new business owner. Many startup founders face accusations from their old employers, claiming that they stole trade secrets. Startup owners may fear that they do not have the resources to fight back against these lawsuits.

A trade secret claim is at the heart of a $2.6 billion lawsuit Google filed against Uber for trade secret theft. The problems started when Uber bought Otto, a self-driving car startup founded by a former Google employee.

Following are four steps startup founders can take to help prevent trade secret lawsuits brought by former employers.

Ways you can avoid trade secret litigation

In California, trade secrets can include programs, techniques, processes and other information that the public would not know. Because the definition of a trade secret is so broad, employers may attempt a lawsuit with a weak claim.

New business owners can take many steps to protect themselves from a trade secret lawsuit. Here are a few:

  • Include work on invention assessment agreements: During the hiring process, many companies will have employees sign invention assessment agreements. This document can let you claim your right to previous inventions and ideas. Make sure to include the work that you have completed for your startup.
  • Review signed nondisclosure agreements (NDA): Understanding the agreements that you have signed with your former employer will give you an idea of expected lawsuits. Some NDAs have such a general definition of confidentiality that they are not enforceable in court.
  • Document your processes: Companies can come up with ideas independent of one another, but business owners may have to prove that they did not steal trade secrets. Keeping clear records of your work can show that you did not steal intellectual property from your old employer.
  • Take nothing with you:  When you leave employment, make sure you don’t take with you any information, in any media, that belongs to your employer, including on your home computer or personal laptop, memory sticks, and the like.  Document that you’ve turned everything in or deleted from personal devices.

The majority of trade secret lawsuits end in failure for the plaintiff. By taking some common sense steps, you can help prevent a lawsuit and dismiss claims against your venture.