Monday, November 13, 2023

6 steps to stop a bad-apple employee from stealing your trade secrets

It's a tale as old as time. Manager prepares to leave company to work for a competitor. Manager connects an external USB Device to his work computer and copies confidential files. Manager gives confidential data to his new employer.

That's precisely what Boston Beer Corporation (which owns Angry Orchard Cider) accuses Brian Soudant, a former strategic planning, business analysis, and brand analysis manager of doing on his way out the door to accept a position with Downeast Cider House, a competitor.

Boston Beer's lawsuit accuses Soudant of "maliciously and willfully misappropriat[ing] Boston Beer's trade secret information by disclosure for a direct competitor."

If an employee is going to steal, an employee is going to steal. You can't prevent a bad apple from doing bad things. But you can take a few steps to best position yourself to protect your assets in the event you have a bad apple in your midst.

1./ Establish clear contractual obligations for employees to protect trade secrets and confidential information, such as non-disclosure agreements and non-compete covenants.

2./ Limit physical and electronic access to trade secrets and confidential information on a need-to-know basis.

3./ Educate employees about the importance of trade secret protection and the consequences of violating their contractual obligations.

4/ Monitor employee activity and behavior for any suspicious or unusual signs, such as the downloading large amounts of data, the accessing of documents outside normal working hours, or the contacting of competitors.

5./ Conduct exit interviews and audits when employees leave the company, while ensuring that they return all company-issued devices and accounts and do not retain any copies of trade secrets or confidential information.

6./ If you suspect that an employee is at risk for stealing confidential information from you, do not accept a resignation notice period. Immediately shut off all physical and electronic access to your information and keep that ex-employee as far away as possible.

Sometimes, however, no matter what you do on the front end cannot prevent litigation on the back end. That said, the proactive steps you take to secure your trade secrets and other confidential/proprietary information will go a long way to determining whether a court will allow you to protect those assets on the back end.