Protecting your Trade Secrets from Employee Theft

It goes without saying that all innovative businesses should make every effort to protect their trade secrets, especially if it is a groundbreaking industry disruptive trade secret; however, this can be more challenging than imagined.   For example, ZeniMax, the parent company of ID Software creators of Doom and Quake games, had a partial win in their case against Oculus Rift, Facebook’s virtual reality acquisition.  Whilst serious money changed hands in the direction of ZeniMax, in that the Texas court ordered that the present CEO of Oculus, Palmer Luckey must pay $50 million of the award for false designation, whilst the former CEO Brendan Iribe must pay $150 million for the same thing.  Oculus must also pay $200 million for failing to comply with the NDA and further $50 million for copyright infringement with another $50 million for false designation.   Slightly puzzlingly, Oculus Rift/Facebook was found innocent of the trade secret theft allegation.

The epic trade secret battle between Waymo and Uber, abruptly settled last week, hinged on the allegation that an out-going member of Waymo’s staff appropriated thousands of confidential documents relating to Waymo’s self- driving car before joining Uber, who is also attempting to create a self-driving vehicle.  The sudden settlement, worth $245 million, that Uber has agreed to pay Waymo, is judged to be the second largest trade secret settlement to be made in the US according to Reuters and has bruised Uber at a time when it already has a couple of other scandals to deal with.

Employees pose by far the largest trade secret theft risk and it should be no surprise that rival companies are constantly trying to poach the talent of their competitors hoping to gain insider knowledge.  The corporate landscape looks very different now from a few decades ago when “jobs for life” were the norm and loyal employees would not have dreamed of breaching their contract or the confidentiality of their employers when they joined another firm.  Unstinting loyalty has been eroded by globalisation leading to companies merging and restructuring with the resultant job losses, which in turn leads to a queue of talent at the doors of businesses across the world which creates the impression that there are plenty of good candidates, therefore is no need to develop a relationship and foster loyalty.

If loyalty comes low down the list then businesses must be proactive in controlling their employees, showing them that you mean to protect your business and its trade secrets by implementing the following:

• Robust Employment Agreements make sure your employees sign and understand the implications of your employment agreement in relation to IP, particularly the senior executives. It should be crystal clear that all works will be assigned to the company.
• Confidentiality and Trade Secret Agreements it goes without saying that the developing innovations of a business must be protected with solid agreements, the strategies around the core innovation must be protected.
• Access Controls limiting an employee’s access and exposure to up and coming ideas, controlling their ability to gain access with password policies and other security policies will help to keep the company safe.  This can be far harder with senior executives but vigorous cyber security and regular audit and scrutiny of all security measures will also help.
• Monitoring employee activities employers should continually monitor employees work, (within the limits required to protect employees’ privacy), and not so much that the employee feels that they are not trusted.
• Exit interview before an employee leaves the firm an exit interview during the course of which a firm reminder of their contractual obligations to maintain the veil of secrecy over the trade secrets which they have knowledge of.

Giambrone’s specialist lawyers can assist you in all aspects of intellectual property (IP) protection including strengthening employee agreements and contracts, together with all the legal steps to protect your IP from theft as well as when you suspect a theft has taken place.

If you would like to know more about protecting the intellectual property of your ideas and innovations or you have experienced a theft of ideas please contact clientservices@giambronelaw.com or call 020 7183 9482