Trade secretsAliphcom, Inc. d/b/a Jawbone won an early legal battle in a lawsuit filed against five of its former employees and its rival Fitbit, Inc.

Specifically, in a preliminary injunction hearing held on 10/20/2015, the individual defendant were ordered by a federal judge to return any confidential information they took and to allow their computers and online accounts to be searched.

To be honest, lawsuits accusing individuals of misappropriating trade secrets and confidential information before joining a competitor is so commonplace that it is easy to become tone-deaf to such claims. This is true even when a litigant like Jawbone dresses up such claims as a “clandestine” efforts to “steal trade secrets”  and “systematically plundering Jawbone” in order to “decimate Jawbone.” See Jawbone v Fitbit complaint (PDF).

But what is often overlooked in trade secret misappropriation cases the sort of computer inspection ordered by the court. What this means is that the individual defendants are ordered to turn over their personal computers and access to their online accounts, which could be email, social media, or other online storage accounts so that those sources may be searched.

As to the search, you are essentially giving a stranger, usually a court appointed computer forensic expert or your adversary’s expert direct access to your personal computers. Such access may include every file that was ever saved, accessed, or otherwise opened with that computer, along with any email you sent, received, and even deleted.

Further, computer forensic inspections of personal computers and on-line accounts, as well as any other computer storage devices (USB drives, portable hard drives, etc.) is an expensive pain in the ass for attorneys. And it is an expensive pain whether you represent the party’s whose computer is to be searched or the party asking for the search. Here’s why:

  • First, there legal fees for filing emergency motions or protective orders to limit the scope of the computer forensic inspection. For example, in a trade secret misappropriation lawsuit filed in federal court, the plaintiff obtained an “ex parte” order (meaning the order was obtained without giving notice or opportunity for the defendant to respond) for complete and unfettered access to my client’s computers and emails with no protections or limitations whatsoever. We were able to set aside the order but only after filing an emergency motion for protective order and having a hearing before the judge as to why the order was problematic and inconsistent with applicable case law.
  • Second, there is the cost of the actual computer forensic expert subsequent inspection. In my experience, this could cost a few thousand dollars all the way up to tens of thousands of dollars depending upon the number of devices, email accounts, computers, and the amount of data involved in the litigation.
  • Third, there is the attorney time for negotiating and drafting the search and retrieval protocol under which the computer forensic inspection will take place. And once these issues are taken care of, there is the cost of actually processing and reviewing the results. Even a limited forensic inspection of a single computer often lead to multiple gigabytes of information to be processed and ultimately analyzed.

Take Aways – Don’t Misappropriate Trade Secrets

Personally, computer forensic inspections are one of my least favorite things about representing clients involved in trade secret disputes – regardless of what side I’m representing. So for the sake of making my life and the lives of attorneys everywhere a little easier, please consider the following:

  • When ending your employment, don’t take any information from your employer, especially trade secret, confidential business information, or customer contacts. Taking one or any combination of these categories of information will almost guarantee a lawsuit against you.
  • Don’t mix enterprise data with your personal computers, portable storage devices, email accounts, or any personal online storage accounts, even if you return any such data. Invariably there will be a “digital fingerprint” showing that at some point you saved/transferred company data to such personal items. More than likely, that transfer was for legitimate business reasons (e.g., you were working outside of the office, you wanted to have a backup in case your laptop died, etc.) But you will eventually be in a position of having to show that whatever was transferred is no longer available to you and most employers want more than, “trust me, I deleted that customer list.” That something more is almost always a forensic inspection.
  • If you absolutely must misappropriate your employer’s trade secrets or confidential business information, limit the collateral damage by restricting your ill-gotten digital gains to a single device or a single computer that is segregated from the rest of your personal digital universe. Along with this last point, be sure to set aside in the range of $20,000.00 for a retainer that you’ll likely need to pay your attorney to defend you in the eventual lawsuit your employer will file.

For more information about protecting trade secrets or investigating potential trade secret misappropriation, contact attorney Jason Shinn. Since 2001, he has collaborated with companies to implement trade secret and intellectual property protection plans, as well as pursuing or defending against lawsuits involving trade secret misappropriation issues. Such matters routinely include responsibility for managing computer inspections, as well as interfacing with law enforcement agencies investigating the theft of trade secrets.