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Take prudent steps to protect trade secrets

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in Business Etiquette,Workplace Communication

In most states, employers can prohibit employees and former employees from sharing trade secrets. But, for something to become a trade secret, it must be treated as confidential in the first place.  

Recent case: Janine worked for 360 Mortgage, a Texas-based mortgage bank. Account executives like Janine contact mortgage brokers nationwide and encourage them to refer borrowers to 360 Mortgage. She worked from a list of brokers that included the finder’s fee each demanded if they referred a mortgage customer.

While still working for 360 Mort-gage, Janine began moonlighting in a similar job at another mortgage lender. She allegedly downloaded 360 Mortgage’s broker list and sent it to her new employer, which emailed all the brokers, inviting their business.

One of the brokers told 360 Mortgage about it and Janine was terminated. She managed, however, to download even more information with her username and password before her email access was cut off.

360 Mortgage sued, alleging that the broker list was a trade secret. Her new employer argued it didn’t meet the requirements under Texas law: 1) it must have economic value, 2) it is not publicly available and 3) it was protected by reasonable means.

The court let the lawsuit continue, ruling the list a trade secret. It included information that was economically valuable since a competitor could learn how much a broker would accept for a referral and could then use that figure to make a competing offer. Finally, 360 Mortgage had taken steps to safeguard the information with a username and password system. (360 Mortgage v. Homebridge Financial Services, No. 1:14-CV-00847, WD TX, 2016)

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