Trade secret misappropriation can be one of the more emotional claims company executives wrestle with so it’s best to step back and decide if litigation is the best move from a business perspective, says Leeron Kalay, a principal at Fish & Richardson.  

“When it’s your intellectual property, there can be tremendous pressure to act, to sue, and show this industry they can’t take your stuff, so it’s important to have a procedure to push back against the tidal wave of emotion,” Kalay said in a webcast hosted by the law firm.     

A good strategy is to have someone other than the CEO look at the allegations and recommend a course of action, he said. 

“Are you making the right decision from a business perspective or from a litigation strategy perspective or because the CEO is upset?” he said. 

The best person might be the general counsel, but it can also be someone else who’s positioned to look at the matter objectively. 

“You could have a newer president or newer CEO, the CTO, or someone from the board,” Kalay said. 

Alternative paths

Depending on what you’re trying to accomplish, it might be best for the person looking at the matter to recommend something other than litigation.

“Do we simply send out a letter?” he said. “Is that sufficient to mark our claims and perhaps scare off competitors?”

Whether or not the end result is litigation, while you’re investigating the matter, the best practice is to have in-house counsel guide the process. That way the communications and materials that are gathered can be protected by attorney client privilege. 

“You have to be careful you’re not conducting these activities as part of a regular audit,” he said.  “Because at that point there may be a risk of waiver of privilege or the privilege may not even apply.”

Basis for belief

The investigation should start with the reason the company believes there’s been misappropriation. “Is it just a rumor?” Kalay said. “Is it that somebody left and you’re not happy about it because they’re working for a competitor? How much do you want to invest the company’s time and money in it?”

Your IT team should be brought in from the start so it can set up a process for preserving information. How well they can do that can differ widely. 

“They may think they know how to preserve information … but be careful,” he said. “Make sure [a key] laptop doesn’t get wiped and reused.”

You’ll want the IT team to have a way to retrace the former employee’s digital steps in the weeks leading up to departure to see if there are unusual patterns that could signal efforts to gather information. 

“You don’t need to overreact but you need to act on it,” he said. 

Bringing in a forensic specialist can help, because that person can perform in-depth analyses of a former employee’s email, especially those sent to a personal account, from their work account or using a USB drive to copy information from their desktop or laptop computer to another device.

“Did they come in after hours or at times that are beyond the scope of their official employment?” said Esha Bandyopadhyay, a Fish principal, who also presented in the webinar. “It’s best to have completed a thorough analysis of all of these things in advance of initiating litigation.”