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Employers Beware

By Rick Bergstrom and Mark Temple
July 29, 2010

The modern employee is increasingly mobile. According to an article published in Forbes Magazine in 2007, 85% of American workers expected to be employed by a new company within the coming 12 months. Moreover, in these difficult economic times, many companies are taking advantage of the opportunity to poach top talent from their competitors. According to an article published in The Wall Street Journal in February 2010, 70% of companies surveyed were very ' or somewhat ' concerned about losing top talent due to cutbacks made during the recession. Employee mobility, coupled with the exceeding ease with which confidential and proprietary trade secret information can be stored and transported, create the perfect platform for trade secret theft by departing employees. Indeed, in a recent survey conducted by Ponemon Institute, 59% of the individuals surveyed confirmed that they kept company information after leaving their former employer. This occurred despite the fact that 79% of the individuals surveyed conceded that they were not permitted to take a company's sensitive information.

Trade secrets, such as methods of manufacturing, targeted areas of growth, and customer sales data are often the “crown jewels” of a business. They have the potential to allow companies to gain a competitive edge in the marketplace and must be adequately protected. Further, given the risks and realities of employee theft of trade secrets, businesses should implement specific practices and procedures designed to protect their confidential information, lest they risk protracted and costly litigation. In addition, the risks and likelihood of hiring “contaminated employees” (i.e., individuals who have stolen trade secrets from their former employers) are equally great, and companies that do not take appropriate proactive precautions in the hiring process can unintentionally find themselves embroiled in time consuming and expensive litigation.

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