Summary
In this episode of the Reasonable Measures Podcast, Chris Buntel speaks with Brad Scheller, partner at Mintz, about why HR plays such an important role in protecting trade secrets and confidential information. They explain that while companies often focus on hackers, outside threats, or dramatic theft scenarios, the more common risk comes from people already inside the business: employees, former employees, co-founders, executives, vendors, and other trusted parties with legitimate access.
The conversation breaks trade secret protection into three practical stages: onboarding, ongoing training, and offboarding. Chris and Brad emphasize that employees need to understand what belongs to the company, what information they should not bring from prior employers, and what they cannot take when they leave. The takeaway is clear: trade secret protection does not need to be overly complicated or expensive, but it does need to be intentional, documented, and supported by repeatable HR processes.
Takeaways
- HR is one of the most important partners in trade secret protection because employee risk often starts with onboarding, training, and offboarding.
- Companies tend to focus on outside threats like hackers, but many trade secret disputes involve employees, former employees, co-founders, or trusted business partners.
- Onboarding matters because companies need to prevent new hires from bringing in confidential information from prior employers.
- Training helps employees understand what trade secrets are, what belongs to the company, and how confidential information should be handled.
- Offboarding should include a clear checklist for returning devices, confirming obligations, and making sure company information does not leave with the employee.
- A strong trade secret program is not just a legal policy. It requires a company-wide culture where HR, legal, IP, IT, and business teams understand their role.
- Trade secret protection works best when it is built into the moments where risk actually happens: hiring, training, access, and employee exits.
Transcript
Chris Buntel:
So everyone thinks that lawyers are the most important people in the world, but it’s actually HR who are the most important ones when it comes to protecting your trade secrets and other confidential information. I’m Chris Buntel, one of the co-founders and chief IP officer of Tangibly. It’s great to be here sharing the mic with Brad Scheller, member at Mintz. Brad, could you introduce yourself? It’s good to see you.
Brad Scheller:
Good to see you, Chris. Thanks for having me on. It’s great to be here. As Chris said, my name is Brad Scheller. I’m located in New York City. I’m a partner at the law firm of Mintz Levin. And the reason I’m here is because I love trade secrets. And I specialize in trade secret litigation, trade secret management. Chris and I have talked a lot over the years about this topic, which is near and dear to my heart. And I work a lot with my employment law partners.
There’s a lot of intersections between employment law and trade secret management, trade secret protection, which Chris and I are going to touch on today.
Chris Buntel:
Fantastic. And this talk is probably mostly going to focus on corporate environments and really how can corporations do things in a way that lowers their risk of trade secret problems happening in the first place. And Brad, it might be useful first to talk about where the risk actually comes from in a corporate setting, because it’s super surprising if you look at the statistics.
Brad Scheller:
It is. And the risk really comes from the employment, human resources side and lack of diligence in terms of the basic hygiene items. Onboarding, keeping up with training at the mid cycle of an employee’s tenure at the company and then offboarding when the employee leaves. The basic things you’d be surprised Chris, are often not basic boxes I should say, are often not checked.
Confidentiality agreements, confidentiality provisions and employment agreements, training employees, only giving access to information on a need to know basis. And then when an employee leaves, make sure you understand that they’re not taking anything with them. Make sure they understand that. They understand their obligations. A lot of times employees leave and they don’t understand that they’re not allowed to take certain things with them.
Chris Buntel:
Well, and Brad, I’m always surprised at who is the risk. Like there’s, what is the risk, which is super important and we’ll talk a lot about, but I find that people worry about the risk vectors the wrong way. Like everyone is worried about hackers and thieves and bad people doing evil things. But if you look at the statistics, especially from litigation, it’s actually the guy or girl that you have lunch with or meet at the coffee machine, it’s your coworkers and your colleagues by far, like 70% of the time, these people who are your friends and colleagues are where the risk is. And when there is a trade secret problem, 70% of the time, it’s actually the people that you never ever think about being a problem.
The next 15% are sort of trusted outsiders, things like collaboration partners, vendors, suppliers, distributors, people that have a relationship with you, but something goes wrong. Maybe the project didn’t work the way everyone had hoped it would. Maybe they’re going to use your information inappropriately, like helping other clients that they’re not supposed to help with your information, but something breaks down.
Then the final 15% are the hackers and thieves and ninjas breaking into your factory at three in the morning. And it’s important. Like I don’t want to sound like, don’t worry about hackers because that’s the wrong attitude. But I find it really interesting that everyone ignores the 70% and everyone is laser focused on the 15%. It’s kind of like being scared of sharks.
Everyone’s scared to death of being eaten by a shark, but statistically, it’s never going to happen to anyone. Like it’s such a rare event. And the trade secret risk factors to me are kind of that same thing of people’s attention is not directed proportional to the risk. What do you think about that?
Brad Scheller:
Oh, that’s 100% correct. I don’t know where you got, I don’t have those statistics or those percentages in front of me as we’re talking here, but that completely is consistent with what we see in litigation. I mean, if you, 95% of the fact patterns that we come across in our cases and cases that we read that are out there in the federal courts and the state courts are employees leaving the company intentionally or unintentionally taking stuff with them.
All the time, it’s not like you said, the covert ninjas at two o’clock, two a.m. in the morning, breaking in and that’s just not the fact pattern that in reality, that’s not what happens. We see John Smith in the engineering department downloading a bunch of data before he leaves and goes to a competitor and shares that same information with the competitor. Or what we often see is relationships that, tight relationships to co-founders that initially, everything was great, but they didn’t have all the right agreements, measures, security, provisions in place.
And then something goes sideways really quick and they break apart. One of the co-founders or one of the executives goes to another company and there’s a huge dispute that costs lots of money to work out. Those are the situations that we see. That’s what really happens in reality.
Chris Buntel:
Yeah, I’ve found also that sometimes people do things intentionally and sometimes they don’t. Where, if you’re leaving your company to go to the arch competitor, you know that you’re doing that. And if you’re downloading 3000 files at 4 a.m. before quitting your job, you know what you’re doing and you probably know that it’s not quite legit or not the right way to do things.
Other people might be changing jobs and have this notion that’s incorrect that because I worked on this project for so long, many years and weekends and late nights, somehow it’s my project or it’s my data or it’s my contact list, even though it’s owned by the company. And at that point, it goes back to training, which you briefly mentioned.
Do your employees understand that they’re getting paid to do work, but the fruit of all that labor is actually owned by the company, not personally owned by them, no matter how hard they work?
Brad Scheller:
That’s right, yep. And a lot of employees, a lot of employees do not realize what they have in their head, what they have in their files. They don’t understand what a trade secret is. A lot of times companies, Chris, as you and I well know, don’t know what their trade secrets are. That’s a huge problem. I mean, maybe that’s a different topic for a different discussion, but I mean, how do you police what you don’t know?
So that’s, know, take inventory, you have to know what you have and then you implement all these measures around it. One other thing I wanted to say is we’ve been talking a lot about people leaving the company, you know, so the company, the corporate environment that gets things taken from them. There’s also the situation where you’re a company and you’re hiring someone into the company onboarding. That’s equally important in terms of trade secret risk.
If you have an employee that you’re bringing into the company, that is coming to the company with misappropriated information, that could equally be a risk for you too. So your onboarding procedures have to be very, very rigorous in terms of checking all the boxes of who you’re bringing in, what kind of obligations that he or she had with respect to the employer that they left.
That can cause all sorts of problems as well. And have to be really diligent about the onboarding process.
Chris Buntel:
Yeah, Brad, that’s really the first time that HR has the opportunity to help out tremendously with trade secrets. If you can prevent that new employee from bringing in trade secrets from any of their previous roles, the immediate one, or maybe even two or three jobs back, it’s often called contamination. You can ideally prevent the contamination, or at least you’ve documented that you did everything you could to prevent that contamination from happening.
So it’s super important. And the employee is being hired because they’re really good at their job. Like maybe they’re a great software engineer or a great biologist or great plumber or whatever their role is. You’re hiring them because they’re really good. They’re someone that you want on board and will make your company more successful and develop great new products and services. And that’s perfectly fine. That’s a good thing. But you have to explain to them that trade secrets are not part of that package.
General knowledge and general skill of being an experienced engineer is what we’re hiring you for. But don’t bring in trade secrets. And also, we’re not going to ask you to use or disclose trade secrets as well. So you kind of, both sides have an obligation there where you should tell them, don’t want to see trade secrets and please don’t bring any inside the building. But also they would ideally agree that they’re not going to use or disclose same things.
Brad Scheller:
Correct. And this is where the human resources department really comes into play. A lot of corporations, small, mid-sized corporations, don’t have in-house lawyers to police all. I mean, the burden and the rigor all falls on the HR department. So, I mean, the HR department itself has to be trained and then they have to have protocols in place that they execute when new employees come into the building.
Chris Buntel:
Yeah, and even if you ask HR, they probably don’t realize the important role they’re playing for trade secrets. So even they need to be trained a little bit on the importance of keeping that gate closed or that wall in place.
Brad Scheller:
100%. When we go into companies and do our training, we’ve got different types of training, different slide presentations. We have one for the executive suite of the company, and then we have one for HR, and then we have one for the engineering, technical folks. But training the HR folks is hugely important.
Chris Buntel:
And I’ve always said that training is probably the one thing you should do if you can only do one thing to protect trade secrets. In terms of what’s your ROI, return on your investment, it’s probably the least legal, but also the most, or not least legal, I mean, like it involves lawyers the least.
Brad Scheller:
Right. And a policy, a trade secret policy too. That’s also super simple. You just have a template and so training and a trade secret policy.
Chris Buntel:
And training is also not necessarily a once and done thing. Some of our clients actually like to have annual refresher or annual recertification, just like a lot of corporate training is done annually about anti-bribery or anti-harassment. There’s a whole suite of corporate trainings that you take every single year. And some of our clients are saying, well, can we do the same thing with trade secrets?
To refresh people’s memories about what are trade secrets, how do you handle them properly, why are they valuable, all that good stuff as a refresher. I think it’s a great idea.
Brad Scheller:
100%. I recommend at least twice a year you have the trainings. Biannuals, we recommend to our clients. But trainings are not the only thing that you shouldn’t do just once. You want to review, renew, update all agreements, confidentiality provisions. The business can change, dynamics inside the company can change. You want to make sure you look at all those provisions as well.
Especially throughout the cycle, you have an employee there that’s been there for 10 years. That’s a long time, and you want to make sure you’re looking at the agreement that you have with each of your employees.
Chris Buntel:
So we’ve talked about onboarding training once they’re on board. Maybe we can talk a little bit more about offboarding, which is where most people, to the extent that they’re worried at all about trade secrets, it’s when someone is leaving the building. And especially if they’re going to either a competitor or to start their own shop, that really amplifies the risk.
And what kind of good habits or best practices have you seen clients use or do you suggest to clients for making that offboarding as effective as possible?
Brad Scheller:
So step, I just want to say at the outset that this offboarding process has become increasingly more complicated in the remote world. A lot of companies have employees all over the place, employees that never even stepped foot in the office ever. But yet they’re working from home, maybe across in a different state in a different country. And it just makes things really complicated.
The overarching advice that we give to our clients is to have a protocol in place that you follow, that HR can follow very rigorously. How do we get a laptop back? If we give them a company laptop, how do we get it back? How do we ensure that all the information is back with the company? It hasn’t been downloaded or so security measures on that laptop, getting that laptop back and then having a checklist for the exit interview.
Make the employee who’s leaving sign obligations that it no longer possesses any trade secrets, that it has reviewed all his or her obligations. Just go through a standard checklist. And if the employee has any doubt or questions about anything, he or she is required to ask, I don’t understand about this information that I have. Is it mine? Is it the company’s? What should I do with it? To have that checklist is the number one piece of advice that we give and we help clients to generate that checklist.
Chris Buntel:
Actually Tangibly kind of resembles some of those comments you made where we’re a virtual company, which a lot of companies and startups these days are. So we don’t have any physical facility. There’s no central office and we do have people spread all around the world. So it does make it more complicated.
Brad Scheller:
Yeah, and information can just be sent in between parties in the blink of an eye. It’s not like we’re going to a building every day. Here’s the filing cabinet of trade. Obviously, that’s not the situation anymore, which just makes it more challenging. I mean, there’s now more technology at our fingertips to protect everything. But there’s also a lot more complexities, like I said.
Chris Buntel:
And what do you think about the idea of notifying a new employer that the person that they’re getting ready to hire from your company might have ongoing obligations or know sensitive trade secrets? There’s a lot of different views on this. Some people feel like it’s always okay, sometimes okay, or maybe viewed as being a little too aggressive or too formal a step.
I’m just curious what your opinion is. Because I think I wouldn’t use it for everyone. Like there are people who probably aren’t very high on the risk scale or they’re going to a company that is clearly not competitive. But I think if you use it in a tactical manner, it can definitely help you. But I’m curious what you think.
Brad Scheller:
Yeah, it’s a really interesting question. And thinking about this now off the top of my head, it does depend on the situation, I would say. My initial reaction when you posed it to me, Chris, was, that seems a little aggressive. I’m not sure I have had a client here at Mintz where they’ve done something like that. However, if there’s a friendly dynamic or relationship, I don’t, there’s nothing as far as I know, illegal about doing something like that.
If it warrants, if it feels right and it warrants it, I don’t have a problem with it, but I do think it’s a case by case situation. I wouldn’t have a flat policy in place where if someone leaves, you always go and tell the employer, this guy might have some of our information, just please be careful during your onboarding process.
Chris Buntel:
That’s right. Well, and the letters I’ve seen were actually written in a pretty friendly manner. Like they weren’t a nasty lawyer letter by any means. It was like, congratulations, we heard that you’re hiring Chris Buntel. He’s a great guy, but he has ongoing obligations from trade secrets that he was exposed to at Tangibly. And we respect your IP and we hope that you respect our IP.
You can write one that is not nasty by any means, but still, if it goes to litigation someday, it’s nice to have that kind of a letter to say, put the new employer on notice and they either acted or didn’t act upon that letter. Having that kind of approach or style to the letter makes it much more palatable.
Brad Scheller:
I like that a lot the way you just posed it. Have you seen that in your experience with your clients?
Chris Buntel:
I have seen something like that used.
Rarely, I’d say, most companies don’t do it at all. And then a few use it, like if it’s a senior executive or a head of R&D, like someone who was really critical and exposed to a lot of trade secrets, I’ve seen it used in those situations. I haven’t seen anyone just blanket use it for everyone from the guy working in the lobby cafe all the way to the CEO. That’s kind of ridiculous. But I personally like that kind of friendly notice letter. So feel free to go for it.
Brad Scheller:
I do too. I like that. So I learned something today.
Chris Buntel:
Excellent.
And to me, like HR coming back full circle to how important they are, it’s really about lowering your risk. Like they’ll never get your risk to zero, and unfortunately, none of us can. But I think that by having HR on board with legal can really dramatically lower your risk and position yourself to deal with problems if they still happen.
Brad Scheller:
100% agree. In fact, I mean, I would expand that and say having the whole company on board, you know, as you and I often use this catchphrase of creating a trade secret culture. The people to start with outside of the lawyers, Chris, is HR because they’re the lawyers to the extent the company has lawyers in-house. They are, I mean, they’re the next in line in terms of maintaining that trade secret culture and maintaining the trade secrets inside the company securely.
Chris Buntel:
Yeah, I think that’s right. And some companies are kind of naturally paranoid or they’ve built up a bit of a paranoia culture, which helps. Other ones, especially ones that are more academically minded, have the notion that, everything should be freely shared. And for a lawyer or for HR, dealing with those kind of people is more challenging because they feel like somehow you’re limiting their ability to be a great scientist or great engineer. So depending on the client and their current situation, it might be relatively easy or relatively hard to build up that kind of culture.
Brad Scheller:
I think it’s worth noting too, Chris, to implement the things we’re talking about takes a little bit of work at the outset, but once these things are implemented, the mindset, the checklists, the protocols, then you’re off and running. It’s kind of on autopilot. I mean, there’s updating here and there throughout the year, but it’s really, there’s a little bit of work at the front end and then you’re cruising once everything’s in place, you’re good to go, so to speak.
Chris Buntel:
Yeah, I think that’s true. And a lot of people have this incorrect notion that trade secrets are somehow difficult or it takes a lot of time or it takes a lot of money and resources. I’ve actually found kind of the opposite when it sounds like you have to where once you get that initial snapshot and things kind of set in place, it’s not that bad.
I mean, it does take some pruning, some keeping an eye on new trade secrets coming on, maybe old trade secrets were made public for whatever reason. But the maintenance is actually not that hard compared to things like a patent portfolio where there’s work all the time, there’s lots of database and things to keep track of, docketing systems. It’s a big production. To have a patent portfolio, trade secrets are significantly easier and cheaper.
They’re not free and they’re not magical, take care of themselves. But the amount of effort and cash and resources to me feel much more manageable.
Brad Scheller:
I agree, 100%. The biggest, I guess I would say, challenge with trade secrets is keeping track of them on a rolling basis because especially for technology companies, well, and non-tech companies because trade secrets, as you know, is a very broad category of information. It’s not just technology, it could be customer lists, financials, marketing strategies.
But keeping track of new trade secret material is probably the biggest challenge. But again, if you’ve got those protocols in place and everyone is on the same page, mentally aligned with that kind of trade secret culture, and you’ve got systems in place like a Tangibly type of platform, then it makes it much more efficient and easier than keeping track of a patent portfolio, maintenance fees, annuities, same with a trademark portfolio as well.
Once you have those protocols in place, trade secrets is a very manageable, yet effective way to protect your IP.
Chris Buntel:
Totally agree. And we’re coming to the end of our time. Any last minute thoughts or advice to people who are interested in improving their HR procedures, either onboarding, offboarding, training, like any words of wisdom?
Brad Scheller:
Well, as you and I always say in this trade secret world is step one is to think about it. Recognize that trade secrets are really a thing. We’re not just here talking about them in our little bubble. I mean, they’re really a thing. You type Google trade secrets, how do I protect my trade secrets? You’ll get this lot of information online, but there’s three main phases to think about is onboarding a new employee, tracking that employee, what we call mid-cycle evaluation and then offboarding. And then, like I said, checklists, simple checklists at each one of those stages.
Chris Buntel:
Fantastic. You can tell I’m excited about this topic. I think HR is really the critical partner that’s often overlooked. And hopefully people who watch this podcast are inspired to improve their systems and really get HR on board with them. And if they have any questions, please contact either Brad or myself and we’d love to go into more detail. But thanks a lot for your time. This has been a good chat, Brad.
Brad Scheller:
Likewise, Chris, great to see you. Bye-bye.
Chris Buntel:
Okay, we’ll talk soon.