Jack seemed like a good fit for Jillian’s company – The XYZ Company, Inc. But things didn’t work out as well as everyone hoped, and Jack resigned after only a year. Shortly after his last day, Jillian learned that Jack was now working for her strongest competitor – and some of their new marketing and products sounded very familiar. In fact, Jack had engaged in theft of proprietary information and was using the stolen information to benefit his new employer.
Jillian was appalled and angry. She needed to handle her former employee’s theft of proprietary information immediately. But she didn’t quite know where to start.
Her first step? Contact her business lawyer or corporate counsel. The following information can help her better understand the situation.
Proprietary Information … and Why It’s So Important
Also known as trade secrets, proprietary information is a form of intellectual property. Patents, trademarks, and copyrights are other forms of intellectual property.
Companies work hard and expend company funds to develop the following types of proprietary information:
- Research and development data,
- Strategic planning,
- Marketing plans,
- Company operation data like costs and pricing,
- Custom or proprietary software programs,
- Company databases,
- Customer lists,
- Formulas and recipes,
- Supply chain data, and
- Business and manufacturing processes.
Proprietary information could be anything that gives a company an economic or competitive advantage over other companies.
It’s important to remember that theft of proprietary information is not just an inconvenience. It’s also against the law. That’s because proprietary information is protected by both state and federal laws:
- Theft of trade secrets is a federal crime under 18 U.S. Code §1832.
- Florida’s Uniform Trade Secrets Act protects this information at the state level.
A company’s proprietary information is a valuable business asset. It’s crucial to protect it from theft and misappropriation.
What Theft of Proprietary Information Looks Like
First, why would a former employee take confidential company information with them:
- They’re angry with their former employer. A former employee might engage in theft of proprietary information to get back at their former boss because of a real or imagined slight. If you’ve recently lost – or are about to lose – a disgruntled or potentially angry employee, consider halting their access to your company’s confidential information. Also, let your IT department know there might be a problem. They might be able to lock down trade secrets and other company information.
- Their new employer wants the information. Some former employees migrate to your competitors. In some cases, the competing company may have lured them to the new job with the understanding that they would bring your company secrets with them.
- Someone is paying for your trade secrets. Another company might want your proprietary information, but not your former employee. So, they might pay the employee to engage in theft of proprietary information for the company’s use.
No matter the reason, theft of proprietary information is wrong. It can also cost your company sales and loss of any competitive edge.
What to Do When You Discovery a Former Employee’s Theft
Business owners may be dismayed and upset when they discover the theft of proprietary information. The following steps they take could help stop the flow of information and its misuse.
Damage control could be the first step. Make sure your former employee no longer has access to your files. Also, increased security could cut off access to anyone trying to steal your data.
We strongly encourage you to contact a business lawyer as soon as you discover any misuse of company information. In addition to advice on how to handle your former employee’s theft, your attorney can help notify the proper authorities if necessary. Also, your corporate counsel or lawyer could help you draft and enforce non-disclosure agreements. A strongly worded cease and desist letter could let the companies misusing your trade secrets know that you will take action if they don’t stop.
Call to Discuss Handling or Preventing Theft of Proprietary Information
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.