News Article

Every year, American companies lose billions of dollars to economic sabotage and information theft.

These crimes may be committed by disgruntled employees, thrill-seeking hackers or even agents of foreign governments. And they may affect just about any company, not just those in high-tech fields.

Womble Carlyle attorneys Mike Hubbard, Press Millen and Todd Sullivan discussed these issues—and how to protect trade secrets—at the "Company Secrets at Risk" seminar, held Oct. 26 at the Cisco Systems campus in Research Triangle Park, N.C. Representatives from FBI and Cisco joined Sullivan, Millen and Hubbard in the presentation. More than 75 business leaders from the Triangle region attended.

"We are in the golden age of economic espionage," FBI Special Agent Mark Moss said. "The threat is extremely real."

Agent Moss said Americans would be shocked to learn how much trade secret theft is done at the behest of foreign governments. He said there even have been recent examples of U.S. troops capturing weapons in war zones, only to discover American-designed parts inside of those weapons.

Other trade secrets losses may be more benign, but they still can hurt business. For example, Sullivan says its not uncommon for an employee to lift trade secrets on the way out of a company with hopes of making himself or herself more attractive to other employers.

Other thieves may steal secrets with hopes of selling them to competitors. They do this in a variety of ways, including hacking into computer systems. But more often than not, they simply ask for the information and receive it. Hubbard said a thief may pose as a customer or contractor and ask legitimate-sounding questions, thereby fooling an employee into giving out too much information.

A number of state and federal laws govern this area and provide some defense for companies. However, business leaders need to be aware of these laws and their limitations.

For example, Millen noted that if someone comes into your home and steals your television set, the law is on your side, even if you left the door unlocked and open. But where trade secrets are concerned, the onus is on the owner to make "reasonable efforts to protect that information."

The three most important laws for North Carolina businesses are the Economic Espionage Act, a purely criminal statute that makes it illegal to steal trade secrets for foreign governments or others; the Computer Fraud and Abuse Act, which allows both criminal and private actions against those who access computerized business information without proper authorization; and the Trade Secrets Protection Act, a state civil statute protecting trade secrets.

But too often, Millen said companies don’t know what their trade secrets are and don’t have a comprehensive framework in place for dealing with those secrets. They also may lack well-designed policies and contracts to protect trade secrets.

"Companies often do not fully understand the concept of trade secrets," Sullivan said.

So what can companies do to protect important information?

- Designate someone to oversee and coordinate trade secret protection efforts;
- Identify which information is vital and create policies that protect that information;
- Understand that policies alone aren’t sufficient and employ security measures, including computer access controls such as passwords;
- Realize that the laws do not just protect highly technical information. They also protect a broad range of business information, such as customer data and pricing histories;
- Contact the FBI immediately if you believe you have been a victim of trade secret theft.

For continuing updates on trade secrets, check regularly on Womble Carlyle’s Trade Secrets Blog.