Confidential Information and the Departing Employee

I recently ran a seminar for the Human Resources Association of Central CT on "Effectively Managing Your Departing Employees."  The issues concerned  how attorneys can help to eliminate, prevent, or mitigate the risks of intellectual property theft.  In this post, I will define the basics of the problem.  In the next post, I will cover how to address the problem.  

• Employees will Leave (Millennials average job tenure is 2.5 years)
• Employees will be disgruntled (Wall Street Journal: 75% of departing employees are disgruntled)
• Employees will have access to electronically stored data (UC Berkeley study shows 90% of critical business data is digital)
• Digital is portable, easy to copy, saved in seconds, and transferred to multiple locations
• Employees do take confidential information, even if by mistake. (Ponemon Institute says 59% of departing employees take information, and 90% of IT professionals)

Based on the these numbers, you could fairly argue that in a three year time frame an average business will likely have to deal with an unhappy, departing employee that will copy accessible confidential information.   This paints a pretty grim picture.  Nevertheless, it is a fair way to think about the problem to manage risks appropriately. 

One of the biggest risks is financial loss from theft of intellectual property and confidential information.  This might cover any of the following:

• Trade secrets (confidential client lists, formulas, data)
• Patents (fully or partially disclosed inventions)
• Copyrights (original works such as software code)
• Trademarks (counterfeit goods, brand damage) 
• Proprietary information (anything you do not want in hands of a competitor)

How does employee or insider theft typically happen?  Here are a few examples:

• Email (with or without attachments)
• Portable drives (thumb or flash drives)
• Smartphone 
• File Transfers (FTP sites)
• Remote access programs (GoToMyPC)
• File Synching programs (Dropbox)
• Old fashion printing and copying

In the next post, I will cover what you can do to help stop or reduce the risks of intellectual property theft.