Thank you for sharing!

Your article was successfully shared with the contacts you provided.
What if a disgruntled employee took a sheaf of trade secret documents containing a new product or process your client’s competitors were dying to get and went to the press with them? Bound as they are by journalistic standards of ethics, reputable newspapers would probably not publish a formula for Coca-Cola, at least without calling the company first. But what if this modern day “Deep Throat” e-mailed the trade secrets to an Internet publisher? I don’t mean cnn.com. Instead, think www.sucks500.com, a Web site that proclaims to provide a place “where all people can get together and vent their grievances about corporate America. … “ If your client’s disgruntled, anonymous — and soon-to-be former — employee took the company’s trade secrets to sucks500.com, and the site then posted them on the Internet for all to see, what would you advise your client to do? Run into court and get a preliminary injunction forcing the site to take down the trade secrets, right? Wrong. “But wait a minute,” your client might say. “I force all of my employees to sign solid confidentiality agreements that prohibit just these sort of shenanigans. Are you telling me that my agreement is worthless under these circumstances?” Basically, yes. But how can that be? Well, in the age of the Internet, everyone is a publisher. And when everyone is a publisher, everyone is entitled to the protection of the First Amendment. Freedom of the press and freedom of speech have given way to the freedom to express one’s self in binary form. Ford ran into this a few years ago when an unidentified employee violated the automaker’s confidentiality policy and employee agreements. The individual sent secret documents about forthcoming Ford Mustang engines and Ford fuel economy strategy to www.blueovalnews.com, a Web site that has dubbed itself the “independent voice of the Ford community since 1998.” Since the motto of blueovalnews.com is, “The backbone of surprise is fusing speed with secrecy,” the site quickly posted the confidential Ford documents on the Internet for all to see. Ford, clearly surprised, sent its lawyers into court for a temporary restraining order under the Uniform Trade Secrets Act that would force the site to take down Ford’s trade secret documents. The Michigan federal district court in Ford v. Lane responded by refusing to grant the injunction reasoning that any injunction would be considered a prior restraint on freedom of the press in violation of the First Amendment. The court noted that trade secrets law protects important economic interests. However, since the trade secrets act is only state law, whereas freedom of speech and the press is in the U.S. Constitution, the district court determined that First Amendment protections must prevail. Just last week, the First Amendment injected itself into the debate over encryption in a California state appeals court. It heard a trade secrets case brought by the organization that licenses the industry standard DVD copy protection system, the DVD Copy Control Association. In that case, the court overturned an injunction that prohibited several Web sites, including a site run by defendant Andrew Bunner, from posting or linking to a software program that cracks the DVD copy protection called DeCSS. DeCSS, a software program developed by a 15-year-old Norwegian teen-ager, cracks the Content Scrambling System, by breaking the encryption algorithm CSS uses to prevent video pirates from making bootleg copies of movies. DeCSS made news last year when a federal district court in New York enjoined several Web sites from offering DeCSS for download. The DeCSS injunction was based, not on trade secrets law, but on the federal Digital Millennium Copyright Act (DMCA). The DMCA makes hacking or cracking a digital copy protection system like CSS illegal. In the DeCSS case, the defendants raised the First Amendment as a defense. They argued that the DMCA was unconstitutional since it restricted a computer programmer’s freedom of speech by prohibiting hackers from using their chosen method of expression, namely computer code. That may sound strange, but a few years ago the 6th U.S. Circuit Court of Appeals held that computer source code is speech protected by the First Amendment. Since then, a variety of groups have attempted to convince courts that the DMCA and federal export controls on strong encryption software are unconstitutional abridgements of speech. For the most part, these attempts have been unsuccessful because the Constitution, in addition to protecting speech, also provides for Congress to enact copyright laws and protect our national security from foreigners who might encode their messages with our software in order to prevent our government from reading them. However, there is no constitutional protection for trade secrets. In cases where the rights of a corporation to protect its secrets are weighed against the rights of the public to know, the public generally wins, and those confidentiality agreements that bind employees provide no protection from outsiders. For the same reason that trade secrets law cannot stifle the press, it also cannot prevent an Internet site from posting computer code that contains a trade secret. So it was in the case of Andrew Bunner, who may post DeCSS on his Web site without fear of violating state trade secrets law. Whether the result would have been the same had Bunner been sued under the DMCA is unclear. In the very few cases where the DMCA has been challenged on constitutional grounds it has, so far, withstood scrutiny. If a company has confidentiality agreements with employees, these can still be enforced because First Amendment protections can be waived. Moreover, damages might still be available against someone who publishes stolen trade secrets, even if a preliminary injunction is not. However, in light of the Bunner case, extra security measures to protect confidential software and documents from misappropriation seem justified. Joel Rothman is an attorney and shareholder in the South Florida firm of Seiden Alder Rothman Petosa & Matthewman. He welcomes questions or comments at [email protected] or (561) 416-0170.

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.