The Risk of trade secret misappropriation during work-from-home arrangements
published : 5 Aug 2020 at 11:29
writer: Alan Adcock
While we've all seen how quickly life has changed during the pandemic, from a business and HR angle the possibility of intellectual property misappropriation and theft occasioned by work-from-home policies may not yet be clear to many. With many employees working outside their company's normal IT security fence, their increased use of their own computers and devices instead of those in their offices with standard or enhanced security mechanisms has made it more challenging for employers to control access to key business information.
In the rush to set up a fully or partially remote workforce, most companies had little time to establish work-from-home guidelines on protection of their valuable intangible assets like trade secrets and confidential business information. Most employers would likely have sufficient internal guidelines on copying files to USB drives, emailing files to personal accounts, and uploading to cloud storages like Dropbox, Google Drive, or OneDrive, but who could have imagined the need for rules precluding sharing proprietary information over Zoom, Skype, Webex, House Party, Ring Central, or Microsoft Teams?
In addition to wilful or unknowing misappropriation by employees, perhaps the biggest threat to many businesses are those unscrupulous hackers who have exploited vulnerable IT protocols and baited people with luring emails related to the current health crisis. Phishing and ransomware emails such as information on vaccines, fake COVID-19 maps, free technology to improve online conferencing platforms, and various other pandemic-related messages have been used to bait people working from home in attempts to access otherwise protected systems. Hacking of smart home devices has resulted in recordings of what was supposed to be confidential conversations being transmitted to not only Amazon, Google, and other providers but to hackers and thieves as well.
While all sectors are suffering from more frequent ransomware attacks, research from Microsoft has shown that the healthcare sector has been particularly affected. The U.S. Department of Health and Human Services faced attempted breaches in early March, but fortunately they survived that scare. However, the University of California, San Francisco, recently suffered a large-scale attack resulting in USD 1.14 million being paid to hackers to prevent the permanent loss of important COVID-19-related research data. Interpol and Europol have taken this threat very seriously, posting COVID-19-specific online cyber threats to educate the public about these very real and harmful threats. Corporations too should plan out effective incident responses and raise awareness with their employees to prevent future infiltrations.
Given this background, there are a couple of important steps that employers should take to start protecting themselves from theft (either intentional or not) or to enhance existing protocols.
First, each employer should speak to the company's HR team to make sure he or she understands the existing workplace rules regarding the handling and maintenance of confidential business information.
Now is the time for HR to revisit existing rules and update them for the new normal. This should include a refresher in employment agreements or individual confidentiality agreements (particularly important for key personnel) to accommodate work-from-home realities. In order to successfully prove a case against a trade secret infringer, the owner must show demonstrable evidence that all reasonable care was taken to maintain the confidential information. This would include regular reminders to employees about what is meant by "confidential information" or "trade secrets" and their duty to maintain that confidentiality if they are allowed access.
Employee sharing of business information has accelerated with the increased adoption of some of the platforms mentioned above. While many employees would already be familiar with a company's rules on disclosing to third parties, such as doing so only under a written non-disclosure agreement, this is complicated with the new ways in which we are all now communicating outside our companies. Document sharing can be controlled by secure transfer tools like password-protected FTP programs, time-limited document viewers, and limitation of the number of downloads.
For businesses in the unfortunate circumstance of having to lay off or furlough employees because of the pandemic, work-from-home realities make the exit interview even more important. In addition to existing requirements such as return of all company property (including loaner devices used from home), HR will want to secure additional undertakings, such as assurances that no unauthorised copying or downloading occurred on any device, no company information is retained in any form, and no confidential information was shared with third parties without proven authorisation. Also, if the departing employee was a member of any R&D, design, or engineering team, an enhanced exit interview is an ideal time to effect IP assignments or other declarations necessary to vest all employee-created IP or improvements in the employer (preferably before termination). Even if the research project is incomplete, this might be a good time also to consider filing provisional patent applications with the employee's written further assurance that subsequent follow-on applications will not be jeopardised.
Second, employers should talk to the company's IT team about existing security measures and any necessary enhancements.
The IT team will be well placed to complement the HR efforts described above by updating existing security measures, implementing new ones, and explaining any changes to employees. This might include a new personal device use policy (or "bring your own device" policy) with an explanation of the employer's right to track and monitor its own devices as well as those of the employee who uses them for their work—all legal in Thailand, as it is in most jurisdictions around the world so long as employees are made aware. IT would likely also find this an ideal time to install new or updated antivirus, spyware, and malware protections. Personal devices will be much more at risk of hacking than fenced-in company IT architecture, so the IT team should install necessary security on personal devices as well if these are to be used for company work outside the workplace. If employees are allowed VPNs or other remote access platforms as a backup to the business network, employers should decide whether to place any restrictions on downloading, copying or transferring files.
While no business can completely insulate itself from leakage of its proprietary information, most can take steps to significantly reduce the risk, mitigate damages, and prove that reasonable care was taken to protect their property. In these unique times, the best internal teams employers can turn to for assistance in establishing the necessary safeguards are HR and IT.
About the author
Alan Adcock is a partner and deputy director of Tilleke & Gibbins' intellectual property department, as well as the co-head of the firm's regional life sciences practice. Since 2005, Alan has received recognition by Asialaw Leading Lawyers as one of Asia's leading business lawyers in the area of intellectual property, and he has been named a top IP lawyer in Thailand by The Legal 500 Asia Pacific and WTR 1000. Alan is also recognised as a leading IP strategist by IAM Strategy 300, an expert on patents in IAM Patent 1000, one of the world's foremost life sciences practitioners by IAM Life Sciences 250, and a leading life sciences regulatory lawyer by Who's Who Legal.
Alan is also closely involved in Tilleke & Gibbins' patent and trade secret litigation practice, focusing mainly on the pharmaceutical, agrochemical, and material science sectors. He is the immediate past president of the Licensing Executives Society of Thailand, and co-chair of the American Chamber of Commerce in Thailand's Food & Agri-business Committee.
Author: Alan Adcock, Partner, Tilleke & Gibbins. Please send any comments or questions about the content of this article to Zac Robinson at email@example.com
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