Firms fight to protect intellectual property

By Amy Joyce
Washington Post

A woman in Georgia who was about to leave her travel agency for a competitor e-mailed her clients, saying she would get them better deals if they followed her to the new agency.

A man in the Miami office of a telecommunications company left for a competitor, taking the client list with him. At the new job, he told those clients he could help them get out of their old contract and could get them a better price.

These employees are accused of doing things on a much smaller scale than what a software engineer at America Online Inc. was recently charged with — selling 92 million members' e-mail addresses from the AOL database. Nonetheless, they are being sued by their former employers for stealing.

"Employees don't realize that taking intellectual property is like putting their hand in the cash drawer and taking money," said Mark Cheskin, head of the labor- and employment-law practice of Hogan & Hartson LLP's Miami office.

As the economy picks up and employees prepare to move to new jobs, there's the potential for competitive information worth millions of dollars to walk out the door, straight to a competitor. Today's work world is much more of a knowledge economy in which technology and information are the main products. So the notion of assets leaving the building each night with a company's employees becomes much more pertinent.

Employment attorneys and the Society for Human Resource Management perceive an uptick in the number of suits regarding trade secrets, a category that includes client lists as well as proprietary systems and patented information.

And employers are becoming more stringent with nondisclosure rules signed by employees, telling them they cannot share their companies' client lists, software or other intellectual property.

Software company SAS Institute Inc. has included nondisclosure agreements in acceptance letters "forever," said Jeff Chambers, vice president of human resources. "Look at what our business is: It's all intellectual property."

Slightly more than half of all companies have new and current employees sign nondisclosure agreements, according to a March poll by the Society for Human Resource Management. And 35 percent of companies remind departing employees of their "trade secret obligation."

But only 7 percent of companies have new employees sign agreements that prevent them from bringing trade secrets from previous employers.

Some employers are afraid that those who had stagnant careers during the economic downturn will offer up trade secrets — such as client lists — to sell themselves in an interview.

"I think a lot of people have been kind of just hunkered down waiting for that next big opportunity," Chambers said. "They don't want to be part of the next flameout. So what are they going to offer? They will come to new companies saying, 'Here's what I can add.' " Then they potentially hand off proprietary information, clients or processes, such as how their current company was able to win various clients, he said.

Technology has made it easier for employees to disseminate trade secrets, but it's also made it easier to locate leaks.

Some employees don't realize what they're doing is illegal, Cheskin said, which is why he encourages employers to educate their workers or reinvent their nondisclosure agreements.