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Article | December 2, 2011
Have you been compromised?
Document the landscape
Keep it confidential
Time is of the essence
Every business has employee turnover. Every business will at some point encounter circumstances which cause the employer to question whether the former employee took confidential information with them upon their departure. When an employee with access to confidential information leaves and is quickly hired by a competitor, the former employer should commence an investigation.
Often employers will review the former employee’s email to determine whether there was suspicious activity in the weeks or months prior to termination. Sometimes the question does not arise until the former employee begins working for a competitor. This article can be taken as a warning to employers about what not to do as well as tips for taking action which will assist you in determining whether confidential information has been misappropriated. Keep in mind that it is not always clear whether confidential information has been misappropriated. The employer should also consider that whatever steps are taken must also enable your counsel to prosecute a case against the former employee and, oftentimes, the competition as well.
When theft is suspected
Enjoining the former employee from use or distribution is crucial. When theft is suspected, the employer has the option of seeking an injunction from the court to enjoin the former employee and the competitor from misappropriating, disclosing or using any confidential information belonging to the former employer. Often the initial step is to request a temporary restraining order. State laws vary; in Illinois, the former employer needs to raise a “fair question” as to the harm threatened and the necessity of the requested injunctive relief. Raising a fair question can come in the form of circumstantial evidence whereby the employer demonstrates, for instance, that a former employee used USB devices very near his or her termination and that the employee was less than truthful during an exit interview.
An injunction is just one of the initial steps in the litigation process. You still have to prove a case down the road which means you have to demonstrate that your confidential information was misappropriated by the former employee.
Of course, litigation is not the only answer. It is sometimes possible to negotiate an agreement with the former employee and/or the new employer. In every case, however, information as to what was taken and when is crucial. The same steps should be taken to preserve information even if litigation is not the avenue through which the goal is reached.
Don’t touch that computer!
Employers often take a wrong first step that can impair the case against the former employee. Typically an employer suspecting trade secret theft will ask their IT department to access the former employee’s computer. DO NOT DO THIS.
Preservation — refraining from any use of the former employee’s computer — is the best first step. Sometimes even turning on a computer can destroy electronic information that could be helpful to your case. Therefore, the first step is to call your counsel, preferably someone with experience in trade secret litigation. The attorney will assist you in preserving the relevant information. After the information is preserved, you can access email and documents and start an investigation.
Experienced litigators will retain a seasoned e-discovery vendor to assist with a forensic preservation and imaging process. There are intricacies to this process that typical IT departments are unaware of and therefore using an e-discovery vendor can be crucial. The information that should be preserved, which an e-discovery professional will seek to find, can include email as well as documents in Word, Excel, and other programs. USB devices, voicemail, smart phones, texts, and other information should also be considered. Not only is this information helpful to your investigation; if a lawsuit must be filed to enjoin the former employee from disclosing sensitive information to your competition, the preservation process is now a required step in litigation. If information is lost and litigation ensues, a party can face evidence spoliation claims from the opposing party.
Cases often hinge on a trail left by the employee. Employees with ill intent sometimes utilize scrubbing software to try and remove any trace of having transmitted confidential information. Employees delete incriminating emails or information prior to their departure. Employees utilize USB devices to transfer sensitive information. All of these scenarios can be detected and the trail can be sniffed out if the employer follows the advice in this article.
Don’t forget to close out any access by the employee. This can include changing passwords, terminating off-site accounts (i.e. Gotomypc), websites, and disconnecting any security access to sensitive information.
Document the landscape
Initial documentation can lay out the landscape of the case. It is helpful to inventory all of the electronic media devices to which the former employee had access. It is also helpful to interview, where possible, employees with information and the former employee before he or she exits — the infamous “Exit Interview.” The Exit Interview is an opportunity to get a statement from the former employee which can be used in litigation later. Any inconsistency or statement that can be used to demonstrate the former employee was less than truthful is significant evidence for a court to consider.
Keep it confidential
The Information the employer seeks to protect must always be treated as confidential in order to later seek protection from a Court. As described in previous articles (Contract Packaging magazine, March/April, 2011, p.24, “Identify and Protect Confidential Information”; July/August, 2011, p. 16, “Should You Put All Your Eggs in One Basket? The Pros/Cons of Exclusive Packaging Service Arrangements”), the information, that which the employer values and may later want to preclude employees from taking and competitors from accessing, must be treated as confidential in order to warrant protection by a court. Don’t be lazy about protecting your information and expect a court to make up for your shortfalls later.
Time is of the essence
The final tip is to act quickly. As they say, you cannot un-ring the bell. Once your confidential information is in the hands of a competitor, the damage can be significant and sometimes irreparable. For example, if your new packaging element is uncovered and copied by a competitor, it could impair your product launch and the success of the product in general.
Courts will be hesitant to issue an injunction if you wait for months to ask for relief. Temporary restraining orders can be issued without notice to the competitor, referred to as “ex-parte.” This can be used to obtain leverage early in the case. If, however, the case is not filed for many months, a court may be less likely to issue an injunction to enjoin the use of information that a party waited for so long to seek protection.
The author is an attorney with Chicago-based Horwood Marcus & Berk Chartered (www.hmblaw.com) dealing in matters of contract packaging.
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