The COVID-19 pandemic is shining a new light on the risk of trade secret theft to businesses worldwide from greater employee mobility associated with rising unemployment and a looming recession, cyberattacks by opportunistic hackers, and a growing remote workforce with technological threats from increased use of smart devices that may leave little to no data trail.
Companies should not only consider what to do to safeguard their trade secrets now, as explored in our earlier post on Trade Secret Protection During the COVID-19 Pandemic, but how best to create and communicate the plan for responding to any discovery of trade secret misappropriation.
- Create and communicate a response plan for trade secret theft or disclosure. Companies should confirm that they have written policies that sufficiently cover the new risks presented by the COVID-19 pandemic that can be reviewed and signed by new employees, easily accessible to current employees, and verified by departing employees policies. Mandatory trainings for all employees should reinforce the importance of trade secrets to a company’s operations, address employee responsibility for protecting trade secrets, penalties associated with misappropriation or violation of company policies, and the process for reporting trade secret theft or disclosure immediately. This response plan should include coordination between the legal department, human resources, and IT.
- Conduct a prompt investigation. Companies suspecting misappropriation should undertake a robust investigation, including a forensic analysis of an employee’s computer or smart device and talking to key witnesses, to confirm the nature of information taken and the scope of any misconduct. Proactive information gathering has many benefits including preserving valuable evidence and assessing the likelihood of success if pursuing injunctive or other relief is necessary. Despite the logistical complexities presented by the COVID-19 pandemic, failure to do so could be used to show a trade secret owner did not take reasonable measures to protect its valuable information.
- Issue a cease and desist letter. A cease and desist letter may be a prudent first step if misappropriation is confirmed because it may prompt the return of valuable information or assurances of compliance with confidentiality obligations. Cease and desist letters can also be sent in parallel with an ongoing investigation and while contemplating litigation and have the added benefit of providing notice and allowing a company to develop the factual basis for potential claims.
- Consider seeking injunctive relief. If letter writing has not resolved the issue, companies should consider bringing a lawsuit to seek injunctive relief or expedited discovery. Information gathered from the forensic investigation and legal arguments developed in writing a cease and desist letter will be a head start for a company that wants to seek a temporary restraining order or injunction and a jumping off point for considering appropriate timing, venue, and substantive claims.
Companies should be vigilant given the value of trade secrets and the increased threats presented by COVID-19 employee mobility and cyberattacks and having a proactive response plan that is communicated to employees will well position them to show they took reasonable precautions to protect their confidential information.