Protecting Your Company from Trade Secret Misappropriation Claims in Tech

Innovation continually drives the technology industry, allowing it to grow and create the next best thing to virtually change our lives. To achieve that, tech companies are constantly on the search for the industry’s top talents - and oftentimes some of those top talents are from other tech companies, sometimes a rival.

In the state of California, non-compete agreements are not permitted in the employment context to make it less restrictive for employee mobility. But with all the high competition of tech companies in that state, it is critical for companies to learn how to navigate trade secret challenges. They must know how to protect their own intellectual property when an employee departs and defending from trade secret misappropriation claims when a new employee joins a firm.

Ashok Ramani, of Keker, Van Nest & Peters, shared with Inside Counsel how companies can protect themselves from trade secret misappropriation claims in the technology industry. Ramani regularly represents tech companies and handles patent and trade secret disputes.

Today, innovation in the technology world definitely impacts the legal world, in several ways.

“Technology companies do new, unexpected things that don’t conform to the more said, settled approach by which the law develops, and requires lawyers and judges both to think differently about addressing legal problems,” he explained.

So, with all the tech company talent competition, why is it so critical for companies to learn how to navigate trade secret challenges?

Well, California has long permitted employee mobility, which many believe fostered the innovation seen for decades in the Bay Area, according to Ramani. However, that mobility is not limitless, and uninformed employees and companies get in trouble when they don’t mind trade-secret best practices.

He added, “For example, even if a new employee has done nothing wrong, a scorned former employer can use sloppy email practices and onboarding to disrupt the new employee’s work at the new employer. A bit of foresight by both the new employer and employee would remove that competitive obstacle.”

And, how can a company protect its own IP when an employee departs? According to Ramani, an extensive exit-interview process is important, along with spot-checking of the departing employee’s computer and office access for irregularities.

Overall, in order for a company to defend itself from trade secret misappropriation claims when a new employee joins a firm, a comprehensive onboarding process can provide a new company cover. Still, Ramani advises, “It would be even better for the new company to ensure that the new employee has operated above board in departing their old employer, to avoid any problems in the first place.”

Further reading:

10 Tips to Help Protect Your Business' IP

Jury's Still Out on the Impact of the Defend Trade Secrets Act

IP Management Plans: A Key to Company Success


Contributing Author

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Amanda Ciccatelli

Amanda G. Ciccatelli is a Freelance Journalist for InsideCounsel, where she covers intellectual property, legal technology, patent litigation, cybersecurity, innovation, and more. She earned a B.A....

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