Can an Independent Contractor share your trade secrets?

Miller Nash LLP,
Oregon and Washington Law Firm

Think Your Independent Contractor Is Prohibited From Disclosing Your Trade Secrets? Think Again.

A recent case out of Massachusetts held that, as a matter of law, in the absence of a confidentiality agreement (or a formal confidentiality policy), an independent contractor was free to disclose a company’s trade secrets, including customer names, pricing information, business processes and work flow patterns, information about business relationships with other companies, and accounting records.

In that case, the plaintiff company hired an independent contractor to assist in the running of the company. It did not require the independent contractor (or other defendants) to sign a confidentiality agreement. The independent contractor later stopped working for the company and the company sued him for trade secret misappropriation. To prevail on its claim, the company was required to prove that it had taken reasonable steps to protect the secrecy of its trade secrets. The court held that the company failed to do so: “It is undisputed that [the company] never required any of the defendants to sign a confidentiality agreement…[The company] has provided no evidence that it took measures to protect its…purported trade secrets…”

The case (a copy of which can be found here) provides a strong reminder that your independent contractor agreements need to contain provisions to protect your company: all too often, we see independent contractor provisions that fail to address critical topics (e.g., confidentiality and intellectual property ownership issues). If you’re unsure about whether your independent contractor agreements are adequate, please contact us.

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