It’s Your Business

The AP&S Business Law Blog

Are Your Trade Secrets Gone Without A Trace?

Trade secret misappropriation presents a significant concern for companies.  Pilfered trade secrets can have devastating effects on a company’s business, especially when trade secrets that are central to the successful operation of its business land in the hands of a competitor.

While the recipe for your company’s world-famous fried chicken might be tucked away in a locked file cabinet inside a secure vault, chances are many of your company’s trade secrets also exist in electronic form.  Customer lists, formulas, manufacturing techniques, pricing structures, and computer algorithms all may exist electronically – on your employees’ computers, in their email, on their smart phones or tablets, or on thumb drives tucked away in their desk drawers, briefcases, or pant pockets.

While most companies implement strong security controls and policies to prevent misappropriation of trade secrets, sometimes such measures are not enough.

With the miniaturization of external storage devices and inexpensive access to cloud-based storage, it is increasingly easy for an employee to intentionally or unintentionally pocket a company’s trade secrets.

When a company’s trade secrets are misappropriated, often it is not without a trace.  Forensic examinations can help a company trace data files, uncover trade secret theft, and provide valuable evidence to help the company prevent further dissemination of the information.

Companies that suspect an employee has misappropriated its trade secrets should act quickly to take possession of all of the company’s electronic devices to which the employee has or had access and immediately preserve computers, smart phones, tablets, thumb drives and external hard drives used by the employee.  A prompt examination of those devices by a well-credentialed forensic expert, coupled with a review of the results by an attorney, could allow a company to minimize the harm that would otherwise result from the theft of their trade secrets.

For example, a forensic examination of the computer used by a former employee could help the company determine whether its files were moved to a thumb drive days before the employee’s departure.  The moment a thumb drive is inserted into a computer, the thumb drive will leave a trace file with its serial number.  Often times, an examination of the computer also will reveal the file names that were transferred to the thumb drive, allowing the company to take immediate action to prevent further dissemination of those files.

A forensic examiner may also be able to restore files that the employee believed were long gone. Indeed, while employees seeking to prevent their actions from being detected may delete the files from their computers altogether, if a forensic examination of the computer is conducted promptly, chances are good that the deleted files can be restored.

If you suspect trade secret theft at your company, quick action and a thorough forensic examination may ensure that your company’s trade secrets are not gone without a trace.

About The Author

Nicole J. Benjamin

I am a shareholder and business litigator at AP&S. I help businesses and their legal departments achieve their objectives by reducing their liabilities, advising them on complex legal matters and defending unavoidable litigation in federal and state court. I am also a member of the firm’s Appellate practice group and counsel the firm’s clients on appellate matters in the Rhode Island Supreme Court and the United States Court of Appeals for the First Circuit.

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