As part of the typical termination procedure, it is advisable for employers to implement investigation and preservation protocols for every employee who, willingly or unwillingly, terminates their employment. Employers should implement cybersecurity measures such as limiting access to the source code, requiring programmers to work in their own locked office, requiring all employees to use RSA security tokens, storing computer servers in a locked room, and using passwords and encryption software. These measures include taking reasonable efforts to keep source codes safe and terminating any employees found to have participated in such misconduct. At this point, we now switch gears and focus on “Employer Must Dos Following a Trade Secret Data Breach, I” in this blog post and Part XIV of our series.
Employer Must Dos Following a Trade Secret Data Breach, I
Employers usually face a number of issues that require their attention following a data breach involving trade secrets. Three of these issues include the need to (1) assess any loss of value to the business, (2) identify who caused or was involved with the breach, and (3) identify the lost, stolen, and/or misappropriated trade secrets. As usual, and for the purposes of clarity, each issue shall be discussed in an individual blog post.
Assessing any Loss of Value to the Business
One of the most negative outcomes of a trade secret data breach is the loss of value to the business. As such, the need for employers to protect their trade secrets and their ability to implement and adopt effective cybersecurity measures may be triggered by the difference between going out of business and expanding the same business. In addition to the risk of the business being shuttered altogether, some of the most significant repercussions of trade secret misappropriation include, but are not limited to, harm to business reputation and customer goodwill, and the loss of the value of the business.
- Loss of business, customer goodwill, and reputational harm – in addition to the public, business partners, investors, and customers losing faith in their ability to protect information, particularly that which relates to people (such as customer lists), employers may suffer reputational harm, loose customer goodwill, and may even lose the business if they are unable to protect their trade secrets. To ensure such reputational harms and business losses do not happen, employers should, upon learning about possible misappropriation of their trade secrets, seek immediate injunctive relief. We invite you to read our blog posts titled “Tips for Seeking Injunctive Reliefs/Injunctions (Preliminary Injunctions)” and “Tips for Seeking Injunctive Reliefs/Injunctions (Temporary Restraining Orders (TROs)),” published under the series “Trade Secret Misappropriation & Restrictive Covenant Claims,” respectively, for more information on how to seek injunctive relief, which includes (Temporary Restraining Orders (TROs) and/or Preliminary Injunctions).
- Loss of business value – getting economic & competitive advantage over competitors in return, employers have to ensure that they have kept their trade secrets valuable by maintaining their secrecy. Usually, such economic & competitive advantage is at risk of being jeopardized after trade secrets are misappropriated. Underscoring why employers need to take all reasonable efforts to protect their trade secrets and other confidential information, employers may not enjoy any economic value forthcoming with any compromised trade secrets, which leads to the loss of business value.
In Part XV, we shall move the discussion forward by hammering on “identifying who caused or was involved with the breach” in our blog post titled “Employer Must Dos Following a Trade Secret Data Breach, II.”
Until then, stay tuned for more legal guidance, training, and education. In the interim, if there are any questions or comments, please let us know at the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer, Author, & Publisher.