June 30, 2020 Practice Points

Trade Secrets Risks You Might Not Have Considered in the Wake of COVID-19

Be aware of the less obvious risks that have come up since the pandemic began.

By Nicole D. Galli

Since the pandemic started, there has been a flurry of articles talking about increased risk to a business’ trade secrets caused by the widespread increase in remote work and the concomitant increased cybersecurity risks and threats. Undoubtedly, these are important points. Companies can and should make sure that they are doing what they can to keep their trade secrets secure when their employees are working from home. In addition, some articles also talk about the need for thorough exit interviews and procedures of employees who are being laid off or at least furloughed, another important area of concern. But there are other risks that may be less obvious.

What Are Your Vendors and Customers Doing?

You may be on top of the need to extend the castle walls to encompass your employees who are working remotely, but have you thought about what your trusted business partners are doing with your trade secrets? The most unusual aspect of the global pandemic is just that—it is global and it is affecting almost everyone. If you haven’t checked in with your business partners as to what they are doing with respect to trade secrets protection, you’d better. Also, as supply chains are impacted, many people have also had to seek out new suppliers quickly—do these businesses have access to your trade secrets and, if so, have you adequately taken the necessary steps to protect them?

Is Your Pivot Generating New Trade Secrets?

As new market needs arise and businesses pivot to fill those needs and/or start doing business in new and different ways, they are undoubtedly creating new trade secrets (as well as other new forms of IP). Are those being recognized, memorialized and protected? Similarly, you may have employees or contractors taking on new roles – have they been indoctrinated into your trade secrets protection efforts relevant to their new roles?

How Are You Going to Investigate and Enforce in the New Normal?

If you do suspect that there is a trade secrets theft, you need to act quickly to secure your property and remedy the situation. Are you prepared for that? Have you thought through how you are going to get a hold of equipment that may be in people’s homes or other remote locations? What if the issue is with a vendor or supplier in another country? How can you get boots on the ground investigating that? With travel restricted and stay-at-home orders still a reality in many jurisdictions, the logistics of containment and investigation are complex. In addition, can you get a court to pay attention to your matter in a timely fashion and secure a TRO or even a preliminary injunction? Even once courts reopen, there will be a huge backlog of matters. Especially in federal court, criminal matters will also be given priority. What alternatives do you have if any? Also, even if enforcement isn’t imminent, to the extent that employees may have used personal devices or kept hard copies in their homes, do you have adequate document preservation systems in place to capture that information?

These are only some examples of the many things that companies need to think about when it comes to protecting trade secrets in the new normal.

Nicole D. Galli is the founder and managing member of the Law Offices of N.D. Galli LLC, in Philadelphia, Pennsylvania, and New York City, New York.

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