How far can businesses go to protect their intellectual property, and what is the minimum that they need to do to protect it? Two cases highlight the boundaries of trade secret law.
This past February, the Third Circuit Court of Appeals held that the trade secret owner’s own lack of trade secret policies did not prevent it from prevailing in trade secrets litigation against a former employee. In Scherer Design Group v. Ahead Engineering LLC, there was a question as to whether the employer secretly monitored the employee’s Facebook Messenger conversations, or whether the employee had just coincidentally not logged out of their account. The district court appeared to suspect that the employer was not completely innocent, and noted that it lacked clear policies regarding monitoring of employees’ use of company resources, including social media. However, when balancing the employee’s duty of loyalty against the employer’s conduct, both the district court and the Third Circuit found for the employer.
On October 9, 2019, defendant Robert O’Rourke was denied a new trial in the case of U.S. v. O’Rourke (U.S. District Court for the Northern District of Illinois). The defendant was arrested while boarding a plane to China, with a hard drive containing over 1,900 documents which he had downloaded from his former company. He argued that the confidential documents weren’t properly marked, and weren’t trade secrets. Judge Wood pointed out that the defendant downloaded the documents on a Sunday, two weeks before leaving the company, and after he was hired by the company’s Chinese competitor. The defendant was sentenced to a year in prison and ordered to pay his former employer over $100,000.
The takeaway: Employers must have clear policies regarding use of company resources, clearly mark confidential documents, and ensure that all employees know which resources are the company’s trade secrets. And employees should not steal the employer’s crown jewels and expect to get away with it!
— Joshua Waterson, Esq.