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Protecting Confidential Information in a Digital World
In the “old days,” an employee bent on furtively stealing voluminous customer files, the results of a research project, engineering plans, and so on would have to find a way to locate the materials (which could be in a locked file cabinet or private office), copy them without being noticed, and get them out of the office. The logistics could be daunting.
In recent years, however, the theft of trade secrets has become much easier, thanks to the prevalence of office computer networks – an employee need only locate the materials on the network and email the data or burn a CD, all of which can be done, to the tune of tens of thousands of pages of information, while casually sitting at a desk during the normal work day. Consider: according to a University of California at Berkley study, 92% of all information created in 2002 was stored magnetically, mainly on hard drives. Some companies password protect or otherwise secure sensitive materials, but as often as not, these systems are easily and frequently circumvented.
Disgruntled employees who believe they are on the ropes and subject to termination are the most frequent and obvious risks – they collect data and take it with them when they go (or, often, even before they go), hoping to use it themselves or sell it to a competitor. For instance, in recent years the following criminal prosecutions – among many, many others -- have come to light. One can only imagine how much additional trade secret theft remains undiscovered or resolved confidentially:
- Two former Boeing managers were charged in a plot to steal product development secrets from Lockheed Martin;
- A disgruntled Cisco employee logged in at a software engineer’s workstation, found valuable information pertaining to released products and ongoing product design, burned a number of CD’s, joined a competitor, and downloaded the information on the competitor’s computer system;
- An ex-employee of Lightwave Microsystems collected computer back-up tapes and attempted to sell them to a competitor;
- A ex-employee of Brookwood Companies, a textile company, was caught with proprietary pricing materials;
- An ex-employee of SRG, an employee placement firm, took valuable information matching employees with prospective employers;
- An ex-employee of Semi-Supply, Inc. took a database of valuable and confidential customer and order information;
- An engineer working for a Gillette contractor downloaded 600 megabytes of plans for new production equipment and tried to sell it.
So what do you do? The topic is, obviously, exceedingly complex and beyond the scope of this article, but here are some basics.
First, take advantage of the laws that exist. Congress passed the Economic Espionage Act of 1996, and various states have enacted their own trade secret protection laws as well. Most of these statutes define the information that fall within their ambits of protection as virtually anything, not already known or readily-ascertainable by the general public, from which an economic advantage can be gained, so long as the owner of the information has taken reasonable measures to keep the information secret. In other words, you waive your right to the law’s protections unless you take reasonable steps to protect yourself. For instance:
- Use the technology that suits the size and infrastructure of your company. Get beyond mere password protection – technologies have progressed to the point where even very small companies can implement firewalls, secure servers and other systems that make it quite difficult for all but the most technologically sophisticated to penetrate;
- Explore the potential to use computer monitoring software that allows you to track individual computer usage and network access. To create a deterrent effect, let employees know – before, during and after their employment (i.e., in an exit interview) -- that you are monitoring what they are doing. Consider including the monitoring policy as a screen saver so that as your employees log on they will either be reminded of the policy or be required to agree to the policy;
- Related to the above, make certain that you have in place the appropriate policies and procedures so that employees are aware that they should have no expectation of privacy as it pertains to their computer usage;
- Require employees to sign the right kinds of nondisclosure and confidentiality agreements;
- Make sure you do all that is required to limit public dissemination of anything you may at some time seek to protect as a “trade secret.”
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