Intellectual Property Theft: How to Stay Out of the Penalty Box

An acrimonious court case between two athletic gear companies provides strategies for discouraging intellectual property theft

7. Understand modern methods of trade secret misappropriation and build defenses against their abuse. CD burning. USB keys. Public e-mail accounts and ubiquitous network access make keeping secrets harder than ever. "It's much easier to misappropriate trade secrets now," says Gordon. "It used to be you had to walk out with a big box of documents. Now you have a 2-gig thumb drive and no one knows." Lange concurs and, having seen enough cases involving trade secrets being spirited away on tiny dongles, she suggests CSOs consider disabling CD burners and USB drives on computers. Just prepare for a revolt by iPod users.

8. Make sure employees understand that on computers, delete doesn't actually mean delete. To be sure, CSOs have lost an edge in preventing trade secret misappropriation because of technology. But they've gained something too. Technology leaves behind more fingerprints than paper. What many fail to fully appreciate is that everything they do on a computer leaves behind some bread crumb that a skilled forensics investigator will find. "It's a huge eye-opening experience," says Lange of employees being confronted with electronic evidence they thought they had deleted or successfully obfuscated. "We're frequently asked to put together a timetable [of events or employee actions], and I think it frightens people sometimes how much we can put together through forensics." A good rule of thumb for employees to understand is that there's no such thing as "delete." Programs that promise to truly delete or eliminate digital files are not perfect either, and in fact, evidence of their presence or use often has a negative effect, making the employee appear as if he has something to hide.

9. Bone up on trade secret misappropriation law. Someone accusing your company of trade secret misappropriation must prove two things. First, he has to prove that what was taken is a trade secret. Second, he must prove that it was taken. "That can be more difficult than you think," says Gordon.

On the first point, the defense will often argue that if something is easily observable or reverse-engineered, it's not really a trade secret. Yes, the employee might have taken that schematic from his old computer, but "it's a hockey stick. I could go buy one and get the same information," says Gordon. On the second point, proving someone took something electronically often relies on cobbling together one of those forensic time lines Lange was talking about. But often that's essentially a string of circumstantial evidence. In Ghassemi's case, in which the plaintiff had quite a bit of information, Easton still could prove only that Ghassemi's computer "experienced" a CD that "appeared" to be created before he left Easton. No evidence exists to prove who made the CD, where or whether files on the CD were even opened on Ghassemi's Warrior computer, never mind if anyone viewed them. In other words, Warrior would be in a much better position defending itself against trade secret misappropriation if there were no spoliation of evidence, no adverse inference instruction. That's why the points on imaging hard drives and communicating the obligation to preserve evidence are crucial.