Trade Secret Theft in the Workplace: Mitigating Misappropriation …media.straffordpub.com › products › trade-secret-theft-in... · 2014-04-23 · Presenting a live 90-minute

Trade Secret Theft in the Workplace:

Mitigating Misappropriation Risks Strategies for New Hire Screening, Employee Monitoring, and Litigating

Against Former Employees and Subsequent Employers

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WEDNESDAY, APRIL 23, 2014

Presenting a live 90-minute webinar with interactive Q&A

Derrick L. Brent, Vice President, Associate General Counsel, Masimo, Irvine, Calif.

Kim E. Choate, IP Counsel, Dow Corning, Midland, Mich.

Kurt A. Kappes, Co-Managing Shareholder, Greenberg Traurig, Sacramento, Calif.

Donald E. Vilfer, President, Califorensics, Roseville, Cal.

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Trade Secret Theft in the Workplace

Mitigating Misappropriation Risks in the Cloud Computing Era –

Strategies for New Hire Screening, Employee Monitoring, and Litigating Against Former Employees and Subsequent Employers

Derrick Brent | [email protected] Kim Choate | [email protected] Don Vilfer | [email protected] Kurt A. Kappes | [email protected]

Trade Secret Theft in the Workplace Greenberg Traurig, LLP | gtlaw.com

Hiring

Alleged Misappropriation/Defense

Departures

Alleged Misappropriation/Offense

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Hiring

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Hiring

What are some best practices/techniques for screening employees to minimize the risk of exposure to claims of trade secret theft?

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Hiring

> Managing the HR and hiring process is more art than science because companies often hire employees based on previous experience in the same industry, or same job within a competitor.

> Teamwork between legal counsel and HR is vital in developing systematic checks in hiring process.

> HR is a crucial partner in the process because they have the most contact with the prospective employee during the hiring process and can monitor trade secret systems after hiring.

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Hiring

> Hiring practice tips:

– Be very clear during interview and offer/acceptance process about trade secrets:

The importance of non-disclosure

Company has no interest in secrets or information from past employers

– Hiring someone to do a similar job on similar products from a competitor – the more vigilant the company will have to be.

– Beware of the overly eager new hire who tries to shape things too much based upon previous experience from a competitor.

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Hiring

IBM v. Visentin 2011 WL 672025 (S.D.N.Y. Feb 16, 2011)

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Hiring

Steps to Take and Questions to Ask

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What are some best practices when your company is involved in situations where it is accused of misappropriating trade secrets?

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> The Importance of Proper Evidence Preservation

– Forensic Images

– Independent Experts

– Early Consultation

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What are some strategies for defending against accusations of misappropriation of trade secrets?

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> Forensic Approaches

– What was actually accessed by employee prior to departure?

– What was typically accessed in the performance of their duties?

– What really happened when USB drives were connected? What was printed?

– Has the company preserved what they should?

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Could a national trade secret law assist? > Pro: Would have a uniform law, one set of rules for everyone

> Con: Law passed could be over-prescriptive or under-prescriptive of what is needed for protection and remedies

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What about litigation from the defense perspective?

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Departures

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Departures

What are some best practices for dealing with a departing employee to avoid or minimize the risk of trade secret theft?

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Departures

> Some of the most important work here is done upfront, during the hiring and supervisory process.

– Stressing the importance of trade secrets during the hiring and orientation

– Supervisory monitoring of trade secrets and employee access

> You cannot rely on post-employment process for protection – cost of monitoring and enforcement are high and successful outcomes cannot be expected.

– Need clear employment policies and good supervision

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Departures

> Post-employment agreements are important, though.

– The agreements should tie into and reinforce pre-hiring agreements and clear employment policies.

– Agreement structure should provide the end game for employment, such as return of copies of data, information, hardware and software.

> Non-competes – Strong policy against them in CA. Pending legislation in MA to ban them. One way of addressing this issue is emphasizing the importance of trade secrets and confidentiality during the hiring process, in hopes that the lessons learned by the employee will remain post-employment.

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Departures

How can you avoid or minimize the risk of trade secret theft from departing employees?

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Departures

> Impossible to completely prohibit

> Focus on deterrence

> Deterrence: Three Key Areas

1. Standard IP Security Procedures

Encourage personal awareness and accountability of confidential responsibilities

Confidentiality agreements

Periodic required training

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Departures

2. Leadership

Promote collegial work environment

• Minimize disgruntled employees

• Listen to employees

Encourage employees to confidentially report “strange” behavior

3. Accountability

Commitment to enforcing policies

Internal communication of violations and consequences

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Departures

> Minimizing Risk: Departing Employee

– Re-affirm confidentiality responsibilities through re-signing agreement upon departure

– IP exit interview

– Monitoring: email activity; laptop; company’s highly confidential databases; shared drives; etc.

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Departures

Considerations Regarding Data Stored in the Cloud

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What are some best practices when your company’s involved in situations where it is the victim of trade secret misappropriation?

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> Best Practices:

– Act Quickly!

– Organize core team

– Early freeze notice

– Early identification of risks/”game changers”

– Understand and appreciate core team’s different perspectives

– Identify key objective(s) and prioritize

– Gather and evaluate evidence

– Determine what end result looks like

– Communications

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> Organize Core Team

– IP Legal

– Technology/R&D

– Security

– IT/Forensics

> Identify Key Objectives

– Containment

– Recovery of market share

– Damages

– Injunction

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> Early Identification of Risks/”Game Changers”

– Early and Quick Action

> Understand Perspectives:

– Business

– Legal

– Technology/R&D

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> Identify business objective

– Containment

– Damages

– Recovery of market share

– Injunction

> Legal

– Minimize damage through quick action

– Gather & evaluate evidence

– Propose solutions

> Technology/R&D

– Consequences: internal & reputational

– Bad science?

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> Determine “end goals” for each perspective and implement strategy to achieve goals

> Strategy can change as facts evolve

– Cooperativeness of former employee

– Plan schemed by employee versus competitor

– Damage caused and potential damage

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> Forensic Evaluation

– Think outside the computer (servers, phones, routers, video).

– No sneak-peek at the evidence.

– Forensic images are a necessity.

– Analysis for access to files, printing, copying, CD burning, cloud storage, email to self.

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What are steps you might take before litigation, or as an alternative?

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> Driven by Key Objectives & Facts

– Quick Containment

Approach individual or employer via call or letter

Meet with individual or employer to discuss

– Evaluate Damage & Level of Action Necessary

Return of information & promises

Signed affidavit

> Preliminary injunction

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When is it useful to involve government agencies?

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> Consider asking Government for help when:

– Former employee is non-US citizen

– Former employee is unstable/unpredictable

– Competitor/corporation has organized the theft

– Information has been widely disseminated

– Large damages or large potential damages

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> Pros and Cons of Law Enforcement Involvement

– When a company discovers or believes that a former employee has disclosed its trade secrets to a new employer, there are two options – seek an injunction or refer the matter to the government for prosecution.

– Injunction - A benefit of seeking injunction is that the company controls the litigation process. A drawback is that the company pays for the investigation and litigation costs.

– Government - A benefit of referring the matter to the government is that the government has tremendous investigatory tools and will bear the costs of the action. A drawback is a loss of control of the process – the company cannot tell the government how to proceed with the case.

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Involving Government

> Before referring a matter to the government, companies need to make sure they do their homework.

> Bring the government as neat a package as possible from the initial investigation – witnesses, evidence, timeline, etc. – which will help the government proceed quickly and efficiently with the matter.

> Be aware that evidence gathered may not be available to you for quite some time.

> There may also be additional press coverage when the government is involved.

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What are litigation techniques worth considering when you are the victim of trade secret misappropriation?

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> Evaluate victims

– Other corporations victimized?

> Evaluate timing of legal action

– FBI Investigation

– Third-party action

> Damage/Containment Issues

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> Kim E. Choate, IP Counsel, Dow Corning, Midland, Mich. - Ms. Kim E. Choate is Intellectual Property Counsel for Dow Corning Corporation and Hemlock Semiconductor Corporation. Kim provides advice regarding enforcing and protecting Dow Corning’s patents and trade secrets - through both litigious and non-litigious means. She also provides strategic guidance to both global corporations regarding international patent portfolio management and enforcement, monetization, trade secret protection and IP security.

> Derrick L. Brent, Vice President, Associate General Counse, Masimo Corporation, Irvine, CA - Derrick Brent is Vice-President and Associate General Counsel for Masimo Corporation, a medical technology company where he provides counsel and handles legal matters relating to intellectual property, employment, compliance and public policy. Prior to joining Masimo, Derrick served in the federal government in Washington D.C. for 12 years. From 2001-06, he was a Senior Trial Attorney in the Civil Rights Division of the Department of Justice, and from 2006-12, he served as Senior Counsel to Sen. Barbara Boxer of California. Derrick has also worked as a litigator in private practice with firms in Chicago and Columbus, Ohio, and served as a law clerk in the U.S. District Court for the Southern District of Ohio for the Hon. Algenon L. Marbley.

> Don E. Vilfer, President, Califorensics, Roseville, CA - Don Vilfer operates Califorensics, a Computer Forensics and Investigative Services firm in the Sacramento area. He conducts and oversees Computer Forensics, eDiscovery and the investigation of fraud, employee misconduct, theft of trade secrets and computer security issues for a broad range of clients. Don previously served in the FBI as the Special Agent in charge of a White Collar Crime and Computer Crimes Unit. During his FBI career he was also assigned to the Washington D.C. Field Office and later was a Supervisory Special Agent at FBI Headquarters in Washington D.C. where he led a major case management team at venues from The White House to the Oklahoma City Bombing. Don is a graduate of the Ohio State University College of Law and a member of the Ohio Bar.

> Kurt Kappes, Co-Managing Shareholder Greenberg Traurig, Sacramento office, and Shareholder, San Francisco Office - Mr. Kappes is Co-Chair of Greenberg Traurig’s national Labor and Employment Practice's Non-Compete/Trade Secret team. Mr. Kappes is a Visiting Professor at the University of California, Davis, School of Law, where he teaches trade secrets law and practice.

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Documents

Trade Secret Theft in the Workplace: Mitigating Misappropriation …media.straffordpub.com › products › trade-secret-theft-in... · 2014-04-23 · Presenting a live 90-minute