If an employee of your company stole an item of tangible company property when he left to start another job – like a car, or computer, or airplane – would you just let it go? Of course not. Yet, studies show that 50 percent of departing employees take confidential business information from their employer before they leave and think it’s perfectly okay to use it in their new job. It’s not. And the former employer does little if anything about it, and so it goes. Crazy? Yes. But it doesn’t have to be.
When trade secret theft happens, or you suspect it will, it’s critical that your company take action immediately. Most intellectual property is stored in a digital format on your company’s computer system or in your cloud, is quite ephemeral, and can be absconded with in the blink of an eye. Literally. And the theft may go undetected for months.
Five Things to do When You Suspect IP Theft
There are five things you should be prepared to do when you suspect a departing employee has stolen your company’s IP.
1. Gather information on the employee. This information should include his position, tenure, performance, field and level of expertise, agreements signed with the company, training completed, assignments undertaken during his tenure, persons he worked closely with, and the stated reasons you’re concerned the employee may have stolen trade secrets. His first line supervisor or person most familiar with the departing employee’s work should be charged with this task.
2. Identify trade secrets at risk. This information should include a list of trade secrets the employee has possessed or used, the projects he has worked on, the information he had access to, any pending patent applications he may be involved in, and any and all trade secrets potentially useful to him in his new job.
3. Understand the circumstances surrounding the employee’s departure. This information includes his stated reasons for leaving your company and joining the new company, the identity of his new employer, the compensation and benefits his new employer has offered, any new and lofty title he may acquire, and how he found his new job.
4. Collect and preserve evidence. This includes immediately reviewing the soon to be former employee’s employment records, all known e-mail accounts, his hard drive at the office, any hard drive he may have at a home office, and all evidence of electronic transfers from your facilities to his home office or any other external devices.
5. Conduct an exit interview. It is important to remind the departing employee of his contractual and legal obligations to maintain the confidentiality of your company’s IP, particularly if you have any thought of commencing legal action against him. This meeting allows you to assess the employee’s behavior to determine the likelihood of a violation. The employee’s manager and company attorney should conduct the interview. Explain the purpose of the interview. Explain the employee’s continuing obligation to preserve the secrecy of the company’s IP after he leaves. Provide him with a written form acknowledging these obligations. Confirm he has returned of all the company’s property. Ask why he’s leaving, where he’s going, and what he’ll be doing. Give him a chance to ask questions.
How to Respond to Credible Evidence of IP Theft
Assuming your pre-litigation investigation uncovers credible evidence of an actual or threatened theft of your trade secrets, it’s important for you and your attorney to discuss how the company should respond, and, if litigation is necessary, what you hope to accomplish by filing a lawsuit.
- Do you want an injunction to prevent further misappropriation and misuse of your IP and to get your IP back?
- Do you want money damages from the departing employee to compensate you for your loss?
- If you do not wish to file a lawsuit, will you be satisfied with assurances from the employee that he has not taken – or will not take or will destroy all copies of – any trade secrets he may still possess?
- Will you be satisfied with assurance he will not use anything he may have taken in his new job?
- Will those assurances be meaningful in light of what you know about the employee’s new employer and the responsibilities he will assume in his new position?
The options run from doing nothing to commencing litigation against your former employee for trade secret theft.
Enforcing IP Protection Policies is as Important as Having Them
Critically, if you want to prevent departing employees from taking your company’s trade secrets to other companies with whom you compete with the intent to use them in their new jobs, you must not only establish a clear set of trade secret protection policies, but when theft occurs you must act quickly, consistently, and decisively to enforce those policies. Do all that you can before trade secret theft happens because remedial action is extremely expensive and rarely fully effective.
Whatever you decide to do, do it with the advice of any attorney you trust and with your eyes wide open.