Most companies proactively bind new employees to various agreements including nondisclosure agreements, noncompetition agreements, invention and assignment agreements and various other agreements, acknowledgments and forms.  Additionally, some companies enforce rigorous trade secret and patent procedures and processes to guide and enforce the protection of intellectual property.

Usually, these agreements are reviewed during exit interviews to remind departing employees of their contractual obligations to the company.  As with most security methods, these protective measures typically keep out only the honest and those without specific or malicious intent, or the naive.  The best offense in defending a company's assets may be in the form of a good defense.  Particular care should be taken to address specific risks by job function and to review what is considered intellectual property, proprietary or confidential information.

In many employees' minds, intellectual property may be restrictively defined as pending patents.  That's not true.  IP has a much broader scope.  Specific definitions of forms of trade secrets should be explained to departing employees including:  client lists, methodologies, strategies, financials, business models, customer and prospect lists, pricing models, competitive analysis, product roadmaps, source code, software architectures, computer design software tapes, product roadmaps, trade secrets, personnel files, financials, computer server "back doors," facility access controls, bank records, salary lists, tax documents, medical records, salaries and personnel files.

Even without considering the legal requirements for Health Insurance Portability and Accountability Act ("HIPAA") and other privacy related laws, many companies' valuations are strongly tied to intellectual property, confidential information, trade secrets, goodwill and client relationships.  Historically, when an employee departed, their files were stored, their computers may have been backed-up on a server and their phone system and e-mail passwords were cancelled.

Times have changed.  Technology, laws, rules and legislation related to computer information have been evolving to address electronically stored information.  This new focus on electronic information - when used proactively by a company - can be the best preparation and deterrent to the theft of intellectual property by departing or disgruntled employees.

Unfortunately, many companies could improve their proactive measures.  Beyond the agreements signed when the company hires someone or when they are reviewed during a separation interview, most companies have not proactively protected the best source for incriminating evidence in the event of intellectual property misappropriation.  When done well after the fact, legal e-discovery for trade secret or intellectual property theft becomes increasingly difficult.  Computers used by departing employees are reformatted, files reopened or modified, deleted or overlaid in preparation for reusing the computer or reassigning it to another employee.

In the event a company suspects a breach of security or misappropriation, having the ability to perform forensic discovery on the former employee's computer - in addition to any home computer or computer at the former employee's new employer - provides a wealth of additional sources of evidence.  While you may have to file suit to gain access to a former employee's personal computer, in most cases, the company itself has possession and ownership of the computer used on the job and can secure or copy the computer for future forensic access.

By preemptively securing the hard drives, setting aside an exact replica within an escrow utilizing proper chain of custody and working from a third "working" copy, the data and equipment's integrity is secure.  At Brown McCarroll, we have protected the company's rights under Texas law to use the evidence and have avoided spoliation, but Texas is not alone in addressing the proper collection and securing of electronic data.  Most other states have already passed laws with regard to spoliation of evidence.

In our capacity as outside counsel, we have had instances where we had suspicions with respect to employees misappropriating, using or threatening to use our client's intellectual property or confidential information.  In these situations we have relied on a third party vendor to assist us and our client companies in securing potential evidence, maintaining chain of custody, performing data recovery services and having the ability to be called as independent expert witnesses for trial regarding the data integrity and recovery.  Our vendor's personnel hold Licensed Private Investigator credentials and are Certified Computer Examiners.  This helps insure compliance with Texas laws on data collection.

We recently used a new service from our vendor which offers a depot-type service where companies can send computers by courier and have forensic copies made and stored for future use thus limiting costs.  We can then advise our clients that the computers can be re-used, and we can inform departing employees of our intent to secure their computers for future use as evidence as needed.

When circumstances warrant, I've advised our clients and those with potential employee issues to consider adding this process.  An ounce of prevention is worth a pound of cure.

About our authors . . .

Tori Levine, Esq., is a Partner at Brown McCarroll, principally located in the firm's Dallas office.  Her practice areas include Business, General Civil, Pharmaceutical and Medical Device, Products Liability and Environmental Litigation.  Tori is a member of the Dallas Bar Association, State Bar of Texas, Defense Research Institute and the Texas Association of Defense Counsel.  She can be reached at tlevine@mailbmc.com.

Jason Park works as a Certified Computer Examiner (CCE) and Licensed Private Investigator in Texas.  He is a member of the International Society of Forensic Computer Examiners and has been involved in the digital litigation support field since 1994. Jason is a Director at Litigation Solution, Inc.  He can be reached at jpark@lsilegal.com.