The Help Desk: Making sure contractors don’t pass on company strategies
Every month, we tackle a question from a reader and get advice from the right experts in a variety of fields to help answer it
Q: I need to hire a contractor for my business, but I know he’s also going to be working for our competitors. How can I make sure he’s not passing on our strategies to our rivals?
A: Given the number of highly publicized information leaks that have made the news lately, nobody will blame you for being a little paranoid. It’s a fair question: How do you protect your company’s information, whether that’s intellectual property or trade secrets, when you’re hiring contractors or suppliers who may also be working with your competition? The first step is to provide information to contractors on a need-to-know basis only. While your contractor may ask for every detail surrounding a project, determine what’s actually essential for the task. Focus on the information that the contractor needs to complete the assignment and don’t share information they don’t actually need.
That sounds simple enough, but what about the information you do have to share? Even for small businesses, it’s relatively easy to do a short confidentiality agreement, one that will provide you with protection by making it clear that both parties are aware of the confidential nature of the information being exchanged and by giving you some options in the event of a leak. A tight confidentiality agreement should be clear about what kind of information is considered confidential or proprietary.
Be warned, however: If you’re working with a foreign contractor or supplier, it can be much more difficult to take them to court. Even if you have a confidentiality agreement, dealing with international parties can make enforcement very expensive or even impossible to do.
What if it’s an invention you’re worried about and not just information? In that case, what you need is a patent. A patent grants the holder a 20-year monopoly on the production and sale of an invention, which means nobody can make off with your plans and start producing it themselves. The trade off, of course, is that patents are public, and you’re required to submit a full description of the invention or process you’re looking to protect. Your other option is declaring your invention a “trade secret.” However, if someone else happens to stumble on the same idea, or reverse engineers your product, they can file a patent and gain the monopoly.