The Key to Protecting Confidential Information from Being Taken by a Departing Employee to a Competitor: Planning

BNA has published a good article by David A. McManus, Prashanth Jayachandran, and Jason Burns on how an employer can protect its confidential information from being taken by a departing employee to a competitor.  The key is to have a plan.  Some of their more interesting points include:

  • In addition to having certain employees sign non-disclosure agreements, an employer should have employees who use their own electronic devices to access company information sign a separate agreement permitting the employer to inspect the devices and delete company information upon termination of employment.
  • An employer should include a clause in noncompete and non-disclosure agreements stating that any violation of the agreements entitles the employer to injunctive relief from a court, i.e., an order that the employee must cease to work at a competitor or return all confidential information.
  • An employer should document the chain of custody of any employee’s devices that it analyzes after the employee leaves to preserve evidence.
  • If the situation results in litigation, an employer should consider bringing claims against the employee under the Computer Fraud and Abuse Act (CFAA), a statute which I have written about extensively.

In addition to providing for the recovery of additional damages not permitted under state law (such as the costs of engaging a computer forensics firm to investigate the employee’s activities), the CFAA also puts the case in federal court.  Thus, the CFAA should be a consideration in any situation where an employer suspects that an employee has improperly taken confidential information.

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