Earlier this week, several sources reported that the Justice Department had announced an indictment of two Silicon Valley engineers who allegedly tried to steal trade secrets for computer chip designs (the indictment also included counts of economic espionage) (see details at the Ethisphere blog or the National Security Crimes Blog by Douglas McNabb). The indictment underscores the need for companies to go beyond just calling something a trade secret: steps must be taken to implement a comprehensive program to identify and adequately protect a company's most sensitive data (90% of which is usually in an electronic form according to published literature). However, even with the best safeguards, employees may try to steal trade secrets for personal gain. Fortunately, those who take trade secrets will usually leave behind a trail that electronic forensic experts can find.
In Maryland, trade secrets are covered under the Maryland Uniform Trade Secrets Act (MUTSA). For purposes of the MUTSA, a trade secret is something that derives independent economic value 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. A company believing its trade secrets have been stolen by employees or other entities may seek relief in civil court by asserting one or more of the following causes of action in Maryland:
- Misappropriation of trade secrets
- Breach of contract (usually referring to a non-disclosure agreement or covenant not to compete that an employee signed)
- Breach of fiduciary duty
- Misappropriation of products
- Intentional misrepresentation
- Constructive fraud
- Tortious interference with prospective advantage
The Maryland State Bar Association (MSBA) Intellectual Property Section recently presented "Theft of Intellectual Property, Trade Secrets and Proprietary Information: Forensic Traces to Make Cases" by Jeff Gross (audio available here), which provides some useful information about tracking thieves' footsteps (you have to skip the long historical introduction to get to the good parts of the audio). Mr. Gross, who is with Computer Forensic Associates, Inc., comments that electronic assests are horrendously easy to steal, easy to transfer, and simple to hide. But with today's computer forensic tools, thieves can usually be identified from their actions involving use of computer systems.
Comments:
- The Trade Secret Blog provides a good summary of the indictment of the two Silicon Valley engineers (which borrows heavily from the article Two NetLogics Employees Indicted For Economic Espionage)
- Cite: Maryland Uniform Trade Secrets Act (MUTSA), Md. Code Ann., Com. Law §11-1201(e)
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Just becasue something qualifies as a trade secret under MUTSA, it is not a protectable trade secret if its holder fails to take reasonable efforts to maintain its secrecy. Factors that Maryland courts have used to determine whether information is a trade secret include the extent to which the information is known outside of one’s business, the extent to which the information is known by employees and others involved in the business, the extent of measures taken by the owner of the secret to guard the secrecy of the information, the value of the information to the owner and to his or her competitors, the amount of effort or money expended in developing the information; and the ease or difficulty in which the information could properly be acquired or duplicated.
