Jerry J. Goldstein

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How to handle the sale of proprietary information

On Behalf of | Nov 7, 2023 | Firm News

In the competitive landscape of California’s business environment, proprietary information can serve as the bedrock of a company’s success. This information, often in the form of trade secrets, intellectual property or unique business methods, provides a distinct advantage over competitors. Unfortunately, not everyone protects that information closely. In a survey of 4,000 employees conducted by Clearswift, 25% of people said they would sell their company’s secrets for $5,000, and 3% said they would sell for as little as $100.

When facing such a breach of trust, your emotions might run high, ranging from shock to anger. However, taking immediate and measured steps is important to mitigate the damages and ensure the protection of your business’s future.

Act promptly and gather evidence

As soon as you suspect or discover the leak, start gathering evidence. This includes any communications, documentation or transactions that might hint at or confirm your partner’s actions. Electronic records, emails, text messages or financial records can all play a big role in corroborating your claims.

Confront your business partner

While it might seem challenging, confronting your business partner directly is an essential step. Doing so gives them an opportunity to provide an explanation or clarify any misunderstandings. However, ensure you approach this conversation calmly and avoid making accusations without evidence to support your claims.

Review your partnership agreement

It is important to go back and review any partnership or business agreements you have in place. These documents typically outline the rights and obligations of each partner, including clauses relating to the handling and sharing of proprietary information. By understanding what your agreement states, you can determine any violations that have occurred.

Secure your remaining information

To prevent further breaches, take immediate action to secure your remaining proprietary information. This might involve changing access codes, strengthening cybersecurity measures or even relocating physical documents to a more secure location.

Seek mediation

Consider seeking mediation to address the situation. Mediation involves a neutral third party who can help you and your business partner communicate, understand the root of the issue and ideally, come to a resolution. It can be a constructive way to rebuild trust or determine the next steps for the partnership.

Reevaluate your partnership

Following such a significant breach of trust, you should reevaluate the future of your partnership. It might be beneficial for both parties to part ways, or you might decide to implement stricter measures and continue working together.

When faced with the unfortunate circumstance of a business partner selling your proprietary information, remember to act with diligence and caution. While the situation can seem overwhelming, by taking methodical steps, you can protect your business, uphold its integrity and navigate the complexities of partnership disputes.