3. COVERING YOUR ASSETS
•! Protect your intellectual property
•! Protect your employees
•! Protect your customers
•! Protect your business’s goodwill
•! Defend against infringement claims
•! Avoid violating rights of privacy and publicity
•! Avoid committing trade secret misappropriation
•! Avoid having your trade secrets stolen
5. A FEW HEADLINES
25 Year Old Waukesha Man Given 30 Months
for Trying to Sell Trade Secrets
The man tried to sell engineering drawings belonging
to his former employer
6. A FEW HEADLINES
Volkswagen Settles with General Motors for
$100 Million Dollars to Redress Trade Secret
Theft by Former Senior Executive
Jose Lopez, GM’s former head of purchasing hired
away by Volkswagen, allegedly revealed plans for an
advanced assembly line and other proprietary
information to his new employer
7. A FEW HEADLINES
Tyson Collects $20 Million Jury Award From
ConAgra in Trade Secret Theft Case
The Court held that disclosure of trade secrets by
former Tyson executives was “inevitable
8. SOME NUMBERS
The FBI estimates that companies suffered more than $13 billion
in economic losses due to trade secret misappropriation in
cases opened in fiscal 2012
Trade secret “thieves” have been identified as:
•! Current Employees – 30%
•! Former Employees – 28%
•! Vendors, Consultants, Competitors, Foreign Businesses,
Foreign Governments – 42%
Another study, which relies on information gleaned from
published opinions, identified 28% of the thieves as business
partners of the victim
9. SOME NUMBERS
•!In 1970, there were only a handful of
decisions alleging theft of trade secrets.
•!In 2008, there were 121 decisions alleging
theft of trade secrets.
•!A recent study concluded that the
number of trade secret cases is rising
exponentially, doubling every 10 years.
10. EMPLOYEES ARE SCARY
•! 50% of employees who left or lost their jobs in the last 12
months kept confidential corporate data
•! 40% plan to use it in their new jobs
•! 56% of employees do not believe it is a crime to use a
competitor's trade secret information
•! 44% of employees believe a software developer who
develops source code for a company has some
ownership in his or her work
•! 42% percent do not think it's a crime to reuse the source
code, without permission, in projects for other
companies
•! 51% think it is acceptable to take corporate data
because their company does not strictly enforce policies
11. TRADE SECRET PROTECTION IS NOT A
GIVEN
Many countries, including India,
Singapore, Malaysia and Hong Kong,
do not provide statutory protection for
trade secrets or confidential information
12. DEFINITION
Trade Secret” means information,
including a formula, pattern,
compilation, program, device, method,
technique or process that . . .
13. DEFINITION
That . . .
•! derives independent economic value,
actual or potential, from not being generally
known to, and
•! not being readily ascertainable by proper
means by, other persons who can obtain
economic value from its disclosure or use,
and . . .
14. DEFINITION
And . . .
•! is the subject of efforts to maintain its
secrecy that are reasonable under the
circumstances
15. INFORMATION WHICH IS NOT
GENERALLY KNOWN
•! The information does not have to be
unknown to anyone else in the world
•! Matters of public knowledge or of general
knowledge in an industry cannot be
appropriated by a company as a trade
secret
16. REASONABLE EFFORTS TO MAINTAIN
SECRECY
•! Some steps to keep the information secret must be
taken – for example:
•! Stamping documents confidential
•! Having employees sign confidentiality agreements
•! Limiting access to those with a need to know
•! Shredding documents
•! Having vendors sign confidentiality agreements
•! Keeping visitors out of certain production areas
17. INFORMATION THAT IS NOT READILY
ASCERTAINABLE
•! The information does not have to be
impossible to obtain. However, there must
be sufficient secrecy so that, absent
improper means, the information would be
difficult to obtain.
•! Matters which are completely disclosed by
the goods or services which a company
markets cannot be trade secrets
18. WISCONSIN ISSUES
•! Customer lists have generally been held not to
constitute trade secrets
•! Wisconsin courts have denied efforts seeking to
prevent former employees and third parties from
using or disclosing information that is merely
confidential for more than two years
•! Inter-company agreements that require
confidentiality for more than two years can be
problematic
19. WHAT TO DO
•! Conduct a trade secret audit to figure out if and to what extent the company
has trade secrets
•! Before hiring a new employee or committing to a new vendor, make sure they
understand that third party trade secrets are not welcome
•! Enter into enforceable confidentiality and non-compete agreements with all
employees and relevant vendors
•! Take appropriate security measures – lock cabinets, rooms and areas, encrypt
and password restrict access, stamp documents, shred old paper and limit
access to “need to know”
•! Take steps upon employee termination - conduct exit interviews and remind
employees of their obligations, wipe all devices (including personal ones) and
change passwords.
•! Provide training to employees about intellectual property protection and
enforcement
22. ROOTS
•! Crazylegs (Elroy) Hirsch
sued S.C. Johnson for
violation of Hirsch’s right of
privacy under Wisconsin
common law
•! The right of privacy at issue
was the right of Crazylegs
Hirsch to take advantage
of his own name
23. ROOTS
In holding that Hirsch could maintain his claim the Wisconsin
Supreme Court concluded that the right of privacy is actually a
combination of four separate rights:
•! The right to prevent intrusion into a person’s private affairs;
•! The right to prevent public disclosure of embarrassing private
facts;
•! The right to prevent publicity that places a person in a false
light; and
•! The right to prevent the misappropriation of a person’s name
or likeness.
24. WISCONSIN STATUTE
•! The results of the Hirsch decisions substantially
matched the (then) recently promulgated
Wisconsin Statute §995.50.
•! The statute protects against an “invasion of
privacy” providing:
•! Equitable relief (injunctions, etc.);
•! Compensatory damages (actual damages or unjust
enrichment); and
•! Reasonable attorneys’ fees.
25. WISCONSIN STATUTE
•! The statute defines “invasion of privacy” as:
•! Intrusion upon the privacy of another of a nature highly
offensive to a reasonable person, in a place that a
reasonable person would consider private or in a manner
which is actionable for trespass;
•! The use, for advertising purposes or for purposes of trade, of
the name, portrait or picture of any living person, without
having first obtained the written consent of the person or, if
the person is a minor, of his or her parent or guardian; or
26. WISCONSIN STATUTE
•! Publicity given to a matter concerning the private
life of another, of a kind highly offensive to a
reasonable person, if the defendant has acted
either unreasonably or recklessly as to whether
there was a legitimate public interest in the
matter involved, or with actual knowledge that
none existed. It is not an invasion of privacy to
communicate any information available to the
public as a matter of public record.
27. PRIVACY RIGHTS UNDER FEDERAL LAW
ARE LIMITED
•! FTC Polices Compliance with Stated Privacy Policies
•! Gramm-Leach-Bliley Act
•! Financial Institutions (including insurance companies) have
an obligation to respect the privacy of their customers and
to protect the security and confidentiality of those
customers’ nonpublic personal information
•! The Electronic Communications Privacy Act
•! Protects transmission and storage of electronic
communications
28. PRIVACY RIGHTS UNDER FEDERAL LAW
ARE LIMITED
•! The Fair Crediting Reporting Act
•! Health Insurance Portability and
Accountability Act (HIPPA)
•! Child On-Line Privacy Protection Act
(COPPA)
•! COPPA requires websites to obtain parental
consent before collecting information from
children under the age of thirteen
