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“Reasonable Measures” To Protect Trade Secrets At Risk With Employees Working-From-Home Amid Covid-19 Crisis

April 01, 2020
Firm Memoranda

Millions of employees across the United States have abruptly transitioned to working-from-home, many for the first time, as a result of widespread efforts to stop the spread of the coronavirus. Employers must be cognizant of the increased risks to their trade secrets associated with these remote employees and take steps to ensure that their valuable assets will be protected.

Legal protection of trade secrets depends on whether a business has taken “reasonable measures” to keep the information secret. Some of the situations that businesses now find themselves in create a risk that courts may find businesses have fallen short. For example, employees may take advantage of being subject to less supervision while working-from-home and use this time to access and take trade secrets for their own gain if businesses have not taken steps to limit and monitor access. Employees abruptly transitioned to working-from-home due to the current crisis are likely to be using their own personal devices and Wi-Fi networks. Employees’ personal devices and home networks may lack appropriate password, virus and security protections, and may be shared with family members or housemates—posing increased risk to any remotely accessible trade secrets. The systems businesses use to allow their employees to work-from-home are also likely to be stretched during this crisis due to unprecedented demand. This may cause even well-meaning employees to engage in riskier workarounds simply to get their work done, such as using personal email, messaging or cloud platforms, downloading trade secrets to personal computers, cellphones
or clouds, and printing trade secrets.

If the new risks precipitated by the Covid-19 crisis catch businesses off guard, they have the potential to destroy significant value invested in trade secret development. For example, in 2020, a jury awarded Motorola Solutions $764 million for Hytera Communications’ theft of trade secrets relating to mobile radios. In 2018, a jury awarded HouseCanary over $700 million for Amrock’s theft of trade secrets relating to its real estate valuation technology, and ASML, a Dutch company, won $223 million against a U.S. competitor for theft of its trade secrets. Many technology start-ups and businesses operating in technologies such as artificial intelligence protect their most valuable technologies with trade secrets, not patents, and the value of those technologies is immense.

In this article, we address the legal framework for protecting trade secrets, key issues businesses face in protecting trade secrets during the Covid-19 pandemic, and some of the measures businesses can implement to mitigate the risks to their trade secrets posed by employees working-from-home. Those steps will reap immediate rewards today by minimizing the risk of theft or inadvertent disclosure and, if necessary, will help businesses enforce their trade secret rights in court in the future.

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Amy Candido
Phone: +1 415-875-6309

Karl Stern
Phone: +1 713-221-7171

Jonathan C. Bunge
Phone: +1 312-705-7476

Andrew Rossman
Phone: +1 212-849-7282

Mike Lyle
Phone: +1 202-538-8166

Michael Zeller
Phone: +1 213-443-3180