As the Yahoo! suit against MForma Inc. highlights, things can get ugly if you suspect former employees have walked off with your trade secrets and joined a competitor. The best way to head off trade secrets disputes—and the potentially disastrous business consequences of your trade secrets getting into a competitor's hands—is to take steps on the front end to protect your confidential and proprietary information. Here are some suggestions:

1. Require employees to sign an agreement not to disclose your trade secrets or other confidential information.
2. Protect your sensitive information by marking documents as "confidential" and limiting access on a need-to-know basis.
3. Address trade secret issues in your exit interviews with departing employees. Ask them to sign a statement that they haven't taken confidential documents or computer files or disclosed your trade secrets. And, remind them of their duty not to reveal confidential information to a new employer. Paid subscribers can access a Sample Exit Interview Acknowledgement Form on our website.
4. If a former employee who had access to your trade secrets goes to work for a competitor in a similar job, notify the newemployer in writing that the employee signed a confidentiality agreement and that you will take legal action, if necessary, to protect your trade secrets. Suggest, as a precaution, that the new employee be assigned to work on projects unrelated to his or her former job.

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