Social Media: Protecting Trade Secrets and Proprietary Information

Sheppard Mullin Richter & Hampton LLP

The ability of employees to steal trade secrets, reveal customer lists, and expose proprietary business information with the press of a button is frightening. In over 85 percent of trade-secret cases, the alleged misappropriator is someone the trade-secret owner knows, typically either an employee or a business partner. David S. Almeling et al., “A Statistical Analysis of Trade Secret Litigation in Federal Courts,” 45 Gonzaga L. Rev. 291, 303 (2009). With the widespread use of mobile devices by employees, particularly because of bring-your-own-device (BYOD) policies and the increase in social media and cloud-computing platforms as a way to share and transfer data, the risks for employers are significantly increased. Some of the most common risks arising from the use of mobile devices and social media are employees taking or revealing customer lists, posting confidential information on social-media platforms, and moving data off the company’s network. It’s common for employees not to even realize what they have done. Courts are beginning to grapple with these types of cases, which provide lessons for employers. Not surprisingly, with innovations such as Card Munch, which allows a user to take a picture of a business card on a mobile device and automatically convert it to a LinkedIn contact, and other popular social-media applications such as Facebook and Twitter, trade-secret litigation is increasing exponentially. The number of cases filed in federal court is predicted to double by 2017. Almeling, supra, at 293. As a result, employers need to carefully craft policies and procedures to deter trade-secret misappropriation and, in the event litigation is unavoidable, position themselves to prevail. A review of recent cases highlights the potential costly impact of failing to implement these policies.

Originally published in the American Bar Association on January 19, 2014.

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