Trade Secret MisappropriationTesla sued a former engineer for trade secret misappropriation on January 21, 2021. It obtained an ex parte temporary restraining order the next day.

Why it matters:

In our experience representing clients in pursuing and defending against these kinds of claims, this case is a good reminder for companies and former employees about the importance of protecting trade secrets and risks when it comes to taking – intentionally or otherwise – an employer’s trade secrets.

Going Deeper:

Tesla hired the defendant engineer on December 28, 2020. It claims within three days of being hired the defendant began stealing “thousands of highly confidential software files from Tesla’s secure internal network, transferring them to his personal cloud storage account on Dropbox …” The files consist of “scripts” of proprietary software code. Tesla asserts it has spent years of engineering time building these scripts.

Tesla’s information security personnel confronted Defendant on the unauthorized downloads. During this interview, Defendant repeatedly claimed he had only transferred a couple of personal administrative documents. However, Tesla’s security discovered “thousands and thousands of Tesla’s confidential computer scripts in his Dropbox.”

Tesla alleges Defendant then claimed he “forgot” about these files. Yet Tesla found the defendant had attempted to destroy the digital evidence by deleting files from the Dropbox account at the beginning of the interview. This was discovered when Tesla’s investigators tried to access his computer remotely during the investigation.

A few points to consider:

First, Tesla appears to provide a text-book example for protecting company data. The Complaint explained that as soon as Tesla became aware of unusual access activity, it immediately investigated the incident. And before the misappropriation, Tesla had limited access to the information in question to select employees. Limiting access underscores the value of the information and protective measures to protect that value.

Second, individuals should assume there will always be “digital fingerprints” or other evidence an employer can use to support a misappropriation claim. And the same evidence will almost always exist if you try to “cover-up” the misappropriation. Conversely, it is important if you are pursuing a trade secret misappropriation claim that the absence of this evidence can be used to defeat the claim. On this point, I’ve successfully used the absence of such evidence to win dismissal of trade secret misappropriation claims.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or litigating the issues discussed in this post. Since 2001, Mr. Shinn has represented companies and individuals in trade secret disputes.