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Thursday, July 27, 2017

Federal Government Has New Weapons to Help Employers Keep Trade Secrets



By: Thomas Eden


Federal Government Has New Weapons to Help Employers Keep Trade Secrets

Robert O’Rourke worked for an undisclosed Woodstock, Wisconsin based manufacturer of cast-iron products since 1984 as a plant metallurgist, quality assurance manager and salesperson. He also helped his company develop international business in Jiangsu, China, which manufacturer also sold and manufactured continuous cast-iron products.

On August 12, 2015, O’Rourke advised his employer that he intended to resign, but failed to disclose that he had accepted employment as the vice president from the Jiangsu, China based cast iron employer. O’Rourke allegedly then downloaded electronic data from his employer’s secure internal computer network without authorization which included trade secrets belonging to his employer.  O’Rourke resigned from his company two days later.

On August 22, 2015, O’Rourke purchased a ticket for a flight to China. At his O'Hare International departure gate on September 21, 2015, he was in possession of his former employer’s trade secrets when federal authorities seized the stolen electronic data and stolen paper documents from O’Rourke.

O’Rourke’s Federal Criminal Case, in which the indictment was filed this week, is one of the very first brought under the The Defend Trade Secrets Act (“DTSA”), signed into law by President Obama in 2016. It applies to any misappropriation of trade secrets. With this new law Companies that are victims of trade-secret theft now have a federal alternative to bringing a civil action to enjoin violations of trade-secret theft and to seek a remedy for violations that already have occurred. DTSA actions are prosecuted by the U.S. Attorney’s Office as a Criminal Prosecution.

O’Rourke’s indictment ordered him to turn over a two-terabyte external hard drive which was in his possession as he sought to board his flight to China. The federal court indictment accused him as follows:

“Robert O’Rourke, defendant herein, with intent to convert a trade secret that as related to a product and service used in and intended for use in interstate and foreign commerce…to the economic benefit of a person other than the trade secret’s owner, and knowing and intending that the offense would injure any owner of that trade secret, knowingly did possess and attempt to possess such information, knowing the information to have been stolen and appropriated, obtained and converted without authorization,” the indictment read.

Common Sense Counsel: For companies with multi-state operations, and even for companies with single-state operations but whose trade secrets are portable across state lines (by hard copy documents or electronically), the DTSA affords a new weapon to protect trade secrets nationwide. In addition, because trade secrets litigation often involves violations of non-competition or non-solicitation agreements, such claims also may be brought in federal court in tandem with the alleged DTSA violation. Finally, all agreements with non-disclosure, confidentiality, trade secrets provisions must include DTSA language to take full advance of all its protections. While you are at it, good idea to include undated 2016 Alabama Non-Compete language, work for hire patent language, electronic access restrictions and build a comprehensive strategy to protect all your intellectual property accessible to employees. Finally, the federal government has delivered to employers a sharp new shinny weapon to help keep trade secrets – secret.

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law. He can be contacted at teden@constangy.com or 334-246-2901 with blog at www.alabamaatwork.com.