Post-employment protection of undisclosed information in an intellectualized economy - A study on how to prevent undisclosed information from walking out of the door after the termination of employment

Abstract

Secrecy has been used in commercial activities for thousands of years as a tool to create and control competitive advantage. In today’s economy, the control and protection of undisclosed business or technical information are, regardless of industry, imperative to obtain first-mover returns from innovation-related activities and facilitate innovation-driven collaborations across industries and countries. Trade secret law is the legal instrument which provides a diverse range of undisclosed information legal protection and is one of the most commonly used forms of legal protection relating to intellectual creations and innovations. By protecting such diverse range of undisclosed information, trade secret protection allows firms to capture and control the commercial value deriving from investments in and execution of R&D activities, and to mitigate risks when engaging in technology exchanges or dissemination. Even if trade secret protection by no means should be understood as a default level of protection which all types of undisclosed information can enjoy, the protection does not entitle a proprietary status to the information. Meaning that market actors are free to develop and exploit the same, similar, or alternative information deriving from independent efforts, but are not allowed to acquire, exploit, or disclose undisclosed information which lawfully is controlled by others and enjoys such legal protection. As firms are becoming increasingly dependent on their ability to invest in and control intellectual capital, assets, and property, they are also increasingly exposed to dishonest practices by actors seeking to misappropriate other firms’ undisclosed business or technical information. Among such actors, former employees have been identified as primarily responsible for acts of misappropriation of undisclosed information. However, even though post-employment exploitation or disclosure of undisclosed information have been identified as frequently occurring and having a negative impact on the firm’s growth, competitiveness, and innovative performance such information, paradoxically, only holds commercial applicability or monetary value if shared among the firm’s departments and employees. This thesis investigates the legal and contractual post-employment protection of undisclosed business or technical information against acts of exploitation and disclosure by former employees, and the interplay between law and management when seeking to achieve such protection in the given context of the industry of medical technology. An industry which is characterized by intensive R&D activity and reliance on the protection and commercial exploitation of intellectual assets. Furthermore, the legal findings are presented in the form of a managerial framework which could be used as a guide by ventures operating in such business environments in how to arrange internal processes and functions to adequately manage undisclosed information as information which enjoys legal protection under Swedish trade secret law and reduce the risks that former employees exploit or disclose such information after termination of employment.