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Are Your Employees Downloading and Selling Your Trade Secrets?

If an employee has downloaded these materials, such as business plans, new product ideas, or marketing strategies, you should be concerned that that employee may leave with that information or provide it to a rival.

A lawsuit filed recently in California, involving two of the most popular makers of wearable technologies, highlights the dangers posed by employees and digital information.  As the New York Times reported, Jawbone sued Fitbit, alleging that Fitbit had contacted a third of its employees earlier this year in an attempt to recruit the employees away from Jawbone.  Allegedly, some of these employees decided to leave for Fitbit and, before they departed, they accessed confidential information, such as Jawbone's current and future business plans, products, technology and market research.  This information was downloaded onto thumb drives, and the employees used programs to cover their tracks or delete systems logs.

In the lawsuit, Jawbone is seeking monetary damages from Fitbit.  The company also asks the court to block the former employees and Fitbit from using this downloaded information.  This dispute comes at an inopportune time for Fitbit—the company has filed for a $100 million initial public offering.

This lawsuit serves as a warning for employers.  Before information became digital, an employee would have had to gain access to physical documents, make copies of them, and smuggle them off the premises.  In today's digital world, as seen in the Fitbit case, an employee can download a company's entire intellectual property portfolio, including all of its trade secrets, onto a thumb drive, slip the thumb drive into his or her pocket, and walk out your office's front door.  Even simpler, an employee could e-mail documents to a personal e-mail or to a rival company.

You do not want to discover, after the fact, that an employee has stolen your company's trade secrets.  Nor do you want to be liable for an employee that pilfers a customer's trade secrets.  For these reasons, employers should be thinking about protocols to implement in order to protect against the digital theft of information.  Here are some suggestions:
•    Written Policies & Procedures: Do you have a written policy that explains how any intellectual property and confidential information created by an employee belongs to the company and not to the individual employee?  Do you have a written policy prohibiting employees from using trade secrets for non-work purposes?
•    Limitation of Access: Do you limit access to sensitive material to only those employees who have a need to know?  Do you use certain methods, such as encrypting documents, to restrict access?
•    Verification: Do you verify what documents are being accessed and by whom?  Do you know when these documents have been accessed?
Implementing preventative measures now may help alleviate the damage and potential liability that results from an act of corporate sabotage.

If you have questions about protecting your trade secrets in the digital world, contact a member of MacDonald Illig's Emerging Technologies or Labor and Employment Practice Groups.

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