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Compliance Key to Preventing Corporate Trade Secret Theft

Posted May 21, 2014

With alleged violations of intellectual property U.S. metals and solar power companies by hackers employed by the Chinese government currently in the news, Inside Counsel magazine recently published a timely article by Z Scott and Elizabeth Pozolo about how to prevent corporate trade secret theft and how best to respond to it in the event it happens.

“The threat of trade secret theft from U.S. businesses is real and complex,” the authors say, noting that no business sector is immune.  As stated by U.S. Attorney General Eric Holder, there are only “two categories” of companies affected by trade secret theft — the ones that already know they have been compromised and those as yet unaware they have been.

Essential for companies to effectively manage the risk involved is understanding the nature of the problem “with a keen focus on a strong compliance culture” and being aware of how to rapidly access the available government resources when threats have been detected.

Notably included in the authors’ tips to help prevent the loss of valuable trade secrets is the following advice:

Create a culture of compliance: In addition to taking steps to tighten IT security, companies must also prioritize compliance and training programs that educate employees’ possibilities of compromise from foreign governments, the existence of the EEA, and its penalties. Companies should establish clear guidelines for what constitutes a trade secret and make employees aware that the company’s policy requires them to report suspicious behavior by co-workers, supervisors and direct reports. Having an anonymous compliance hotline in place will encourage employees to report illicit trade secret activity that may save the company from criminal liability down the road. Companies should not underestimate the need for a strong compliance program and policies in this area. Recently, a U.S. company entered into a non-prosecution agreement with the U.S. Attorney’s Office settling allegations of trade secret theft and accepting responsibility for their actions and pledging to continue a culture of corporate compliance.

Other tips involve prudent hiring and firing practices relative to employees with access to confidential and proprietary information.

Click here to read the complete article.