Fatal Mistakes that Can Leave Your Trade Secrets Unprotected
In our News section, we noted that a California jury recently hit Pfizer with a $38 million verdict for surreptitiously stealing over a decade’s worth of medical research for its own use. Some of the details of this case are rather salacious: Pfizer approached, and had discussions with the non-profit Ischemia Research and Education Foundation about using the Foundation’s database to conduct trials of its new medication, Bextra. Instead of paying the Foundation for the right to use its database, however, Pfizer held back-door negotiations with one of the Foundation’s employees, who promptly provided the database to Pfizer – without any payment being made to the Foundation.
So, if your small business deals in sensitive proprietary scientific technology or research, what lessons can be learned from this case about how to prevent your small business from being grievously harmed by a rogue employee?
By way of background, you should be aware that this area of the law falls under the general rubric of “unfair competition.” Included under this umbrella are cases involving theft of trade secrets, trademark infringement, false labeling and misappropriation. In many of these cases, the top priority is stopping the rogue employee, as well as any entit(ies) he is providing your confidential information to, from continuing to use this information to your business’s detriment. For example, had the Foundation learned that its employee was dealing with Pfizer behind its back, and was in the process of transferring the Foundation’s confidential scientific information to Pfizer, its initial order of business would have been to stop this employee in his tracks. How is this done?
Typically, the small business must move quickly to seek an Order from the Court that freezes the status quo until such later time that the Court decides whether this employee (and any other entity he is providing this purportedly confidential information to) has acted properly or improperly. In lawyer’s terms, this is generally referred to as Temporary Restraining Order, or “TRO.”
Securing a TRO is not simple, however. First, since you are seeking to restrain another from engaging in his customary activities and from generating income, the Court will likely require you to post a bond sufficient to pay damages if you later lose your case. Second, the papers you provide the court in support of your application for a TRO must convince the Court that not only are you likely to win this case, but that unless your application is granted, your business will suffer irreparable harm. In short, you need to marshal concrete proof – naked allegations alone will not suffice – of this employee’s wrongdoing, as well as the significance his actions are having, or will have, on your business if he is allowed to continue. Further complicating matters is that this application needs to be made quickly; allowing a significant amount of time to pass from the time you learn of this employee’s misdeeds until you take legal action not only hurts your small business, but also undercuts your assertion to the court that prompt and decisive action is needed to prevent irreparable harm and the dilution of your business.
In sum, if you believe that someone either is or has wrongfully stolen your business’s proprietary information that you expended significant time, resources and energy to develop, and you are committed to stopping him from damaging your business further, you must take prompt and decisive legal action. No one will view your cause sympathetically if you passively allow this situation to linger.