The trade secret minefield: What workers risk when changing jobs

August 5, 2020

By Paresh Dave

OAKLAND, Calif. (Reuters) – Self-driving truck entrepreneur Anthony Levandowski on Tuesday received an 18-month prison sentence in the highest-profile trade secrets theft case in Silicon Valley in recent years.

Here is a look at where the law stands on taking documents when leaving a job.

What was Levandowski convicted of?

Prosecutors said Levandowski deliberately moved over 14,000 sensitive files to his personal computer while working at Google with a goal of eventually benefiting his future employer, Uber Technologies Inc. Levandowski was indicted for stealing 33 documents deemed trade secrets, but pleaded guilty to taking just one document. He agreed that the document, a weekly project-tracking spreadsheet, was a trade secret.

What is a trade secret?

Companies have sought to protect increasing amounts of private information such as formulas and processes from leaving their walls by deeming them trade secrets. Disputes over whether something is a trade secret often hinge on whether others in the field know about it and whether it is independently valuable.

“The line is often drawn by the company you’re leaving, and they often declare things to be trade secrets that aren’t trade secrets,” said Ed Swanson, a San Francisco criminal defense attorney.

Is it safe to take anything before leaving a company?

Attorneys on both sides of these battles said the safest route is to ask permission to take any desired files.

“Some companies are very generous with that if you bring it up ahead of time,” said Jim Pooley, an employment law attorney in Silicon Valley.

In addition, workers likely without concern can leave with items that have been published, are generic in nature or that they have possessed since before joining the company. Engineers, for instance, could keep public records related to issued patents, while salespeople could exit with a contacts list they had from before joining a company.

Employment law attorney Nicole Galli said a rule of thumb may be asking, Would this be something the company is “going to be willing to file a lawsuit over?”

What are the risks of taking something without okay?

Most disputes are settled out of court, with workers agreeing to return files and sometimes inspections of their devices to verify no copies remain. Workers also may have to stay away from certain projects or industries as part of settlements.

In the rare cases where the items in dispute are so valuable that companies involve law enforcement, workers could face years-long prison sentences.

The new employer sometimes pays for a worker’s defense if it deems the allegations unfounded. Other companies, including Uber eventually with Levandowski, have fired workers for removing materials from their previous workplace.

Levandowski told the court that his actions were “not worth the loss of respect” from family, friends and colleagues and the public humiliation he has suffered.

What about accidents?

People who accidentally leave with some files in their phone or backpack rarely face criminal prosecution. But workers who leave for a competitor face greater risks, regardless of their position, experience or intent, attorneys said.

“Make sure you’ve sent nothing to a personal email,” said Swanson, who this year beat a trade secrets prosecution against a former Jawbone employee who left for rival hardware maker Fitbit.

“Pay attention to where you back up your devices,” he added. “Make sure you’ve looked at every thumb drive you have that could have something from the company.”

(Reporting by Paresh Dave; Editing by Greg Mitchell and Leslie Adler)

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