White Collar Attorneys Publish Article on Strategic Remedies for Victims of Trade Secret Theft

Law360 | September.16.2013

White collar and corporate investigations partner Mark Mermelstein and white collar and corporate investigations managing associate Mary Kelly Persyn recently authored an article in Law360 entitled "Strategic Remedies For Victims Of Trade Secrets Theft." The article discusses a number of actions that victims of trade secrets theft may utilize to limit damage and maximize deterrence. An excerpt from the article is included below.

Regardless of the number of firewalls, monitoring systems and policies put in place, the world of cybertheft prevention knows no fail-safes; if an employee wants to steal information, he’ll find a way. Employees must be allowed access to confidential information to do their jobs, and once they have access, misappropriation becomes possible. The key then to fighting employee cybertheft is to maximize the deterrent effect by: (1) Before the theft occurs, publish to employees the severe and immediate nature of the sanctions, and (2) once the theft occurs, make the sanction for such conduct as severe as possible.

The first step is to provide notice of potential sanctions to employees in an effort to preemptively dissuade the conduct in the first place. Employee manuals should contain clear statements describing the prohibited conduct and prescribing particular protocols for handling and safeguarding information both during and at the conclusion of employment. Because no written policy can keep up with the explosive growth of technology, the prohibited conduct should be described broadly enough to include any misappropriation. The period directly leading up to an employee departure is particularly sensitive.

Employees who will soon leave the company need a clear understanding of the requirement to return or destroy company information stored on personal laptops or PDAs. Similarly, soon-to-be-former employees must understand that access to company information stored in the cloud is strictly prohibited after their departure. And manuals should clearly notify employees that termination, civil litigation and criminal referral will all be considered by the company in the event of employee violation of these policies. In noting that criminal referral for violators is an option, the company should explain the reach of the Economic Espionage Act (18 U.S.C. § 1832) and note the associated penalties, including fines, restitution and prison time. The statutory maximum term of imprisonment for a Section 1832 violation is 10 years.

In the event of employee theft, the company must undertake a careful analysis to determine what, if any, remedy is appropriate. Assuming that the theft is well documented, the company may wish to consider termination if the culprit is still an employee. In addition, options include doing nothing, negotiating with the perpetrator, civil litigation, criminal referral or some combination thereof.