Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Departing employees who steal company secrets on their way out are a growing problem for corporate America, prompting employers to step up legal actions against computer data thieves. Labor and employment attorneys say that given the highly competitive nature of today’s business world and a more fluid work force, corporate espionage has become a growing threat for employers. The culprits, they say, range from employees who steal information to start their own business to those who leave to work for a competitor and want to take patented formulas, strategies or customer lists with them. In New Jersey, an employer is suing a group of former senior-level employees, alleging that they improperly accessed the company’s computer system, obtained revenue and marketing information, and used the information to determine where to locate a competing business. P.C. of Yonkers Inc. v. Celebrations! The Party and Seasonal Superstore, 2007 U.S. Dist. Lexis 15216 (D.N.J. 2007). In Minnesota, a judge on Sept. 18 ruled that the former publisher of the St. Paul Pioneer Press unlawfully took confidential information and shared it with the paper’s competitor, the Minneapolis StarTribune, when he took over as publisher there. Judge David C. Higgs found that Par Ridder, who was accused of leaving the paper with a laptop filled with confidential information, violated the state’s trade secrets act and his common law duty of loyalty to the Pioneer Press. Ridder was barred from working at his new job for one year. Northwest Publications v. StarTribune Co., No. C6-07-003489 (Ramsey Co., Minn., Dist. Ct.). Lawyers note that, while corporate espionage is nothing new, what is new is the ease with which it can be done. “Roll back the calendar 20 years ago and employers knew to look for employees leaving the office with a big box of files in their hand. Now, it’s so simple to put something on a disk and put the disk in your pocket or e-mail it to yourself to your home computer, or a third party,” said Audrey Mross of Dallas’ Munck Butrus, who gets about a call per month from employers concerned about outbound employees swiping proprietary information. Lawyers note that, while suing an employee over stolen data can create negative publicity for a company, more employers appear willing to litigate to protect more proprietary information from leaking out, and to send a message to other employees. “I do see that there is an increase in the number of those suits being brought because the employers want to get the message out that ‘We’re not going to tolerate this type of illegal competition,’ ” said Thomas N. Ryan, of Laddey, Clark & Ryan in Sparta, N.J., who represents manufacturers in labor and employment. In 2004, Ryan helped a leather-treatment manufacturer pursue legal action against an employee who allegedly misappropriated proprietary information from the company and planned to set up a competitive business in Brazil. Ryan said he sought help from federal prosecutors, who pursued criminal charges against the employee and prevented him from leaving the United States and taking trade secrets with him. U.S. v. Ribeiro, No. 2004-8113 (D.N.J.). “More often, rather than preventing it, companies are forced to seek redress after the information has already been taken,” Ryan said. On taking action That’s why it’s crucial for employers to take legal action against an employee who has stolen data, said Thomas Sadaka of Berger Singerman in Fort Lauderdale, Fla., who represents management in technology and data security issues. “My personal opinion is: Regardless of the potential for negative publicity, [employers] should always take action,” said Sadaka, a former prosecutor. Lawsuits targeting misappropriated company data are generally pursued under the Computer Fraud and Abuse Act (CFAA), a federal law that prohibits employees from accessing a company computer for improper use. Many states also have their own statutes that protect company computers from unauthorized uses. While companies crack down on potential company data thieves, employee rights attorneys caution that what might look like data theft isn’t always the case. Too often, they note, employers will accuse employees of stealing data for personal use, when the employee is taking data to report wrongdoing. “It’s important to distinguish cases where an employee takes the record or data for their own use compared to when they’re taking it to show the government that there’s been wrongdoing,” said Ronald Schwartz, an employee rights attorney with Chicago’s Katz, Friedman, Eagle, Eisenstein, Johnson & Bareck.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.