Contact: 402-341-3070
jjansen@mcgrathnorth.com
Protecting trade secrets can be a challenge for companies in today’s mobile work environment. As employees leave one job for another, or seek to start their own company, employers are sometimes faced with uncertainty regarding the potential loss of confidential, proprietary information when an employee departs.
McGrath North attorneys were recently engaged to represent a company in a matter involving the unauthorized use of trade secrets by a former employee who resigned to work for a competitor. The employee e-mailed several sensitive, proprietary documents to the employee’s home computer three days before his resignation. A number of the documents were clearly identified as “confidential,” and dissemination of the information was restricted by a number of company policies.
A person is subject to criminal prosecution under Nebraska law when he or she obtains property or services of another after exceeding the limits of his or her authorized access to a computer or computer system. A person may also be criminally prosecuted under federal law if his or her conduct meets the criteria set forth in the Economic Espionage Act of 1996. In this instance, McGrath North attorneys immediately contacted state and federal prosecutors to present information regarding what appeared to be possible criminal conduct by the departing employee. After a careful review of the facts, the local county attorney quickly obtained a search warrant, resulting in the immediate confiscation of the employee’s computers, thus minimizing the employee’s ability to disseminate the company’s trade secret information to its competitors. The offending employee was criminally charged and convicted for his conduct. In addition, the company initiated civil litigation against the employee, resulting in the issuance of a restraining order restricting any further use or dissemination of the company’s proprietary information.
Our client’s experience in this matter emphasizes the importance of taking several precautionary steps to protect a company’s rights in the event an unscrupulous employee attempts to misappropriate the company’s trade secrets:
- Work with your attorney before any problem arises to ensure that appropriate internal policies are adopted to properly identify confidential information, and to further restrict the dissemination of confidential and proprietary information outside the company. To maximize the effectiveness of these policies, it is vital that all key employees read and review the policies, and sign appropriate acknowledgments as evidence of their familiarity with the terms and conditions of the policies. Each time a policy is revised, employee acknowledgments should also be obtained.
- Work with your attorney before any problem arises to establish appropriate procedures to have trained IT personnel periodically check the company systems for unauthorized access, downloading, copying, or dissemination of confidential information. It is important that the IT personnel be trained to conduct those steps in a way that will not adversely impact any forensic investigation that may be initiated in connection with a criminal or civil case.
- Monitor the conduct of departing employees to prevent unauthorized access to company systems.
- If unauthorized use or disclosure of confidential information is discovered, immediately contact an attorney to ensure that appropriate steps are taken in a timely manner to deal with the unauthorized conduct of an offending employee.
Before joining McGrath North in 2003, Jim Jansen served as the elected Douglas County Attorney for nearly 13 years. During his tenure, Jim was responsible for the oversight of all civil and criminal cases handled by the County Attorney's office. Because of his experience, Jim's work in McGrath North's Litigation and Trial Practice Group emphasizes representing businesses and individuals in matters involving government agencies, and representing employers in a variety of matters involving employee misconduct.
