Can a Lawsuit Help Mitigate the Risks of Trade Secret Theft?

Trade secret law is constantly evolving as technologies in the workplace change.  Staying up to date is critical.   Recently, I attended an online seminar focused on theft of trade secrets in the workplace. The presenters included private practice attorneys from a national firm and in-house IP counsel from two large companies.

There was a consensus that you cannot prevent an employee from stealing trade secrets in all cases. This is especially so with the advent of cloud computing and bring your own device policies in the workplace. The focus should be on mitigation of risk before the theft, and implementation of an action plan after the theft.  I have commented on these same issues several times on this blog.

With respect to action plans after theft, I was interested in the insights of the in-house IP attorney. The attorney stressed the importance of having a team assembled to address trade secret theft to include security, technology, and legal.  When making a decision on pursuing an injunction in court, the assembled team will need to identify objectives based on a series of factors including the value of the intellectual property at issue and the business issues implicated.

I agree with these points.  Having a team in place, with written documentation of it, not only will help a business act quickly, but will also serve as evidence of the reasonable measures taken to protect the trade secrets.  A dedicated team will also facilitate regular communication between departments to stay on top of changing technologies and workforce demographics.

The pros and cons of litigation were also discussed.  The cons are understandable and include costs of litigation.  One presenter mentioned that litigation should be a last resort.  That might be agreeable as a general policy provided other measures are utilized to consistently address the issue via other means.  However, there are some upsides to pursuing litigation that may not be readily apparent.

Litigation serves as a reminder to others of the personal financial risks of misusing confidential information or trade secrets.  If employees understand that a business will not hesitate to file a lawsuit to protect its valuable information, the employees are less inclined to engage in misconduct.  In addition, a good attorney advising an employee on exit strategy will always ask about a company’s policy on enforcing non-compete or non-disclosure agreements.  Thus, the enforcement policy impacts the strategy of the departing employee.  

To illustrate the point, consider the NFL.   I know of an author who wanted to publish a book that arguably (but unlikely) used intellectual property of the NFL.  The author’s attorney advised against using the material despite the fact that the material was unlikely to infringe as a matter of law.  Why not use it? Simple. The NFL will crush you and they have a track record of doing it.  

There are many instances where the NFL took immediate action to shut down a potential infringer.  A quick Google search turned up a law review article and numerous stories of enforcement.  The word gets out.  The NFL will enforce its intellectual property rights.  The NFL does so in a broad and sweeping manner.   

The NFL’s policy is certainly not going to mesh well with every corporate culture, and I do not intend to advocate for litigation in all circumstances.  However, strategic use of litigation for the right case can go a long way toward protecting a business in the future.  Litigation can address an immediate risk, but also serves as a reminder to others about the risks of misuse of intellectual property.