By Karl Kronenberger
Partner, Kronenberger Rosenfeld
This is the 2nd in a series of three articles on employee mobility:
Article 1 - Frontal Lobotomies and Employee Mobility in California, California Trade Secrets & Inevitable Disclosure;
Article 2 - Best Practices Before An Employee Leaves For A Competitor;
Article 3 - (Coming soon - They’re Leaving For a Competitor. Now What Do You Do?)
When an employee announces they are leaving for a competitor, don’t underestimate the damage they can do if they steal your trade secrets.
Even the biggest tech firms struggle to keep their confidential information protected, especially when employees leave for a competitor.
It’s certainly not a situation that you want to face. Once they’ve left, you’ve lost control of the situation and the potential damage can be devastating.
Consider these recent high profile stories.
An ex-Apple engineer was arrested July 7 at San Jose International Airport preparing to board a flight to China. He has been charged with stealing confidential information pertaining to Apple’s autonomous car project.
Six former and current Fitbit Inc. employees face federal indictments, alleging they stole trade secrets from Jawbone, a defunct fitness wearable device maker.
In both cases these individuals face convictions of up to 10 years in prison and $250,000 in fines per count.
And, with less high profile drama, but just as strategic, one of our clients discovered that their star sales representative downloaded a sales database to his laptop before he went to a competitor. We immediately filed a lawsuit against him and his new employer. The case was successfully resolved before our client suffered any significant financial harm.
So, what’s the lesson in these stories?
You can’t afford to ignore the financial damage that can result from ex-employees misappropriation of trade secrets. You need to be ready for the worst. That means you should establish robust controls before employees leave. Not doing so can lead to a cascade of time-consuming, expensive problems after the fact.
Indeed, setting up controls ahead of a resignation can actually prevent, and even create compelling disincentives for key employees to leave for a competitor. And it can help you avoid big litigation fees.
Have they already left? Now what do you do?
Without preventive action taken by an employer well before an employee exit, there is often no smoking gun evidence that an employee actually misappropriated trade secrets. In the cases of the ex-Apple engineer and the ex-Jawbone employees, their former employers had logs, or other forensic evidence, of the employees either taking trade secrets before leaving or using the trade secrets after leaving. An active, ongoing compliance program, which includes preventive measures like the ones explained above, is the best defense against expensive and time-consuming legal wrangling.
We advise on all aspects of setting up programs to protect against trade secret misappropriation. And, we can assist you with an employee resignation - before, during, and after they leave.
Please feel free to contact me. I look forward to assisting you with this highly strategic area of your business.
Click here for a free copy of our Checklist On What To Do After An Employee Has Left. It will provide important suggestions for actions to take after an employee announces their resignation.
This entry was posted on Monday, August 06, 2018 and is filed under Resources & Self-Education, Internet Law News.