United States: An Ounce Of Prevention Is Worth A Pound Of Cure When It Comes To Protecting Your Trade Secrets

Last Updated: May 3 2018
Article by William Brian London

Anyone working in the healthcare industry knows the saying: "an ounce of prevention is worth a pound of cure." It's one of the most common adages used when discussing the benefits of a healthy lifestyle or the importance of regular preventive care with patients. Unfortunately, many of those same healthcare providers who offer their patients this wisdom are probably guilty of ignoring their own advice when it comes to protecting trade secrets. 

What Is A "Trade Secret" Anyway?

Perhaps the most well-known example of a trade secret is Coca-Cola's secret formula—reported to be so valuable that The Coca-Cola Co. has kept it locked away in a special vault for over 125 years. Under modern legal standards, however, just about any type of information that gives your business an edge over its competitors can be a trade secret. 

The Defend Trade Secrets Act, a federal law enacted under the Obama administration in 2016, states that "all forms and types of financial, business, scientific, technical, economic, or engineering information" can be considered a trade secret, as long as the information meets two conditions. First, the owner of the information must take "reasonable measures" to keep it secret (a special world-famous secret vault is not necessary). Second, the information must have independent economic value based on the fact that it is not generally known or not readily ascertained by others.

Courts Have Held That Patient Lists And More Are Trade Secrets

Various healthcare-related information can be legally protected as a trade secret, provided it meets the necessary statutory definition. Courts in New York, Illinois, Washington, Ohio, Pennsylvania, and Delaware have found healthcare providers' patient lists and appointment schedules to be trade secrets.  

While they acknowledged that a private medical provider's patient information is not something that is typically available in the public domain, these courts noted that the information found in such lists—which usually includes patient names, mailing addresses, medical diagnoses, treatment codes, and insurance-related information—can be extremely valuable to other doctors seeking to start or expand a medical practice. Thus, as long as the provider has taken reasonable measures to keep that information confidential, courts have not hesitated in finding that patient lists are entitled to trade secret protection.

Other healthcare-related information that could potentially be considered a trade secret includes billing and collection rates, fee schedules, medical protocols, surgical techniques, financial statements, marketing plans and strategies, contract rates for managed care plans or insurers, vendor and supplier lists and contracts, and referral resources.

Why Should You Protect Your Trade Secrets?

Given the rapid evolution of the healthcare industry, it has become increasingly important for businesses to protect any information that could offer a competitive advantage. Trade secret laws can provide healthcare employers with valuable protection in this regard by preventing your competitors from gaining access to the secrets to your success. 

A competitor who is able to access your fee schedule, for example, could use that information to undercut your rates and expand their market share, perhaps even taking portions of yours. Likewise, a disgruntled physician from your organization could copy your patient list and use it to solicit patients when establishing their own competing practice.

If you protect such information as noted above, you can ensure the conditions are met for the information to be considered a trade secret, giving your organization grounds to seek relief in the form of a temporary restraining order or preliminary injunction. And, unlike other forms of intellectual property, there are no time limits placed on the protections afforded to trade secrets. As the information remains confidential, the safeguards can be kept in place indefinitely.

Top 10 Best Practices For Healthcare Employers

Since confidentiality is the linchpin of trade secret protection, it is vital that you take steps to protect your organization's information before it walks out the door. Here are the ten most urgent steps you can take to ensure your organization's trade secrets will be protected:

  1. Require any employee whose job allows them access to trade secrets or other confidential information to execute nondisclosure and noncompetition agreements.
  2. Include a strict confidentiality policy in the employee handbook that incorporates a list identifying all information and materials that your organization considers confidential.
  3. Include nondisclosure provisions in every agreement with a vendor or independent contractor who could potentially access confidential information.
  4. Place a red "CONFIDENTIAL" stamp on any documents or hard copies that contain information that should be treated as such.
  5. Store confidential documents in locked file cabinets and restrict physical access to any rooms used as storage for confidential information.
  6. Shred any copies of documents containing confidential information when disposing of them, rather than using the trash or recycling bin.
  7. Use password protection for computer systems used to store confidential information.
  8. Ensure the password is granted only to staff who have a legitimate business purpose for accessing confidential data.
  9. Conduct exit interviews with departing employees to remind them of their confidentiality obligations.
  10. Require departing employees to sign a statement certifying that they have returned all confidential documents and information they received or otherwise obtained during their employment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Practice Guides
by Mondaq Advice Centers
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions