Three Lessons From DuPont Trade Secret Case

Sept. 20, 2011
Digital mobility and globalization mean manufacturers need to be more vigilant regarding intellectual property.

DuPont Co. won big last week when a jury awarded the company nearly $1 billion in its trade-secrets case against Kolon Industries Inc. The ruling provided some redemption for DuPont after the company accused former employees of giving away proprietary information regarding its high-strength Kevlar fiber to the South Korean competitor.

DuPont's victory may have sent a message to manufacturers and their employees that misusing trade secrets can result in severe consequences. But are companies doing enough to prevent confidentiality breaches in the first place?

Michael Songer, one of the lead attorneys representing DuPont in the Kolon Industries case, says there are several key steps manufacturers can take to reduce their vulnerability to information security leaks. According to Songer, a partner and intellectual property lawyer with Crowell & Moring LLP, companies should:

1. Secure their computers but don't hinder employee productivity: Certain technologies and software can reduce the access employees have to proprietary information. But protections that are too onerous can hinder an employee's ability to do his or her job. One of the more successful ways companies can protect their intellectual property is through secured server network. This is a clear wall outside that allows employees to only do certain things from inside the company on internal computers. Internal networks allow IT departments to monitor usage when it's in a controlled environment inside the company.

2. Protect sensitive information with technology that limits employee access to particular files: Install software that prevents employees from copying certain files to external storage devices, such as thumb drives. Another protective measure that companies can implement includes a system that separates certain files so employers can be alerted when employees access protected documents. "That seems to be the one our clients go for the most," Songer says. "You put in a vigorous computer system that has fire walls and is partitioned."

3. Make their expectations clear regarding private information upon an employee's exit: Employers should conduct an exit interview with departing employees and make sure they sign an exit agreement that says the employee is returning all company materials. "That may seem trivial and isn't really going to stop anyone, but from a lawyer's perspective it gives you certain rights when they sign the agreement," Songer says. This should be combined with an auditing procedure where employees bring all their materials to a central collection point. But avoid engaging with the employee in a confrontational manner.

Such measures are becoming increasingly necessary as the digital world expands the reach of information, Songer says.

"You're seeing more people working from home and having computers that they take home, providing more opportunities," he says.

Globalization also raises the risk level for companies trying to protect their proprietary data.

"You have more companies willing to get into the system and sometimes, unfortunately, you have companies that are willing to break the rules," Songer says.

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