Trade secrets lawsuit highlights need for company computer policies, expert says

By Chandra Lye | Jun 8, 2017

CHICAGO — A dispute between two companies over trade secrets is a warning to other businesses about a need for strict computer policies, to help prevent lawsuits over the disclosure of trade secrets, one expert lawyer said. 

Litigation between Molon Motor and Coil Corporation and Nidec Motor Corporation shines the light on the need for company policies to restrict the use of USB and other portable devices on computers with sensitive information, said attorney Gregory Andrews, with the firm of Jackson Lewis in Chicago. 

The situation arose when Molon’s former head of quality control, Manish Desai, copied data onto a USB device and took it with him to his new job at Nidec. 

Nidec had requested the charges in Chicago federal court be dropped as Desai was an employee at Molon when he copied the information, and they claim there was nothing unlawful about his actions. 

However, the court denied Nidec’s request to have the charges dismissed and noted that as part of his employment at Molon, Desai signed an agreement that included, “banning the unauthorized use of company data.”

“I think it is a signal to employers that they need to update policies so that they have in place something that was referred to in the case, and that is the computer-use policy that would restrict the use of USB type of devices, external storage devices, thumb drives, flash drives, memory sticks,” said Andrews, an expert on trade secret cases. 

“If they had [such a policy], the judge and the plaintiff in the case would not have had to invoke the inevitable disclosure doctrine," Andrews said. "Having to use inevitable disclosure as sort of your gap-filler for you because you didn’t have a policy in place creates a little bit of uncertainty for you when you are trying to protect trade secrets.”

Andrews explained that the policy did not need to apply to each and every employee.

“Not every employee is going to be exposed to the same level of confidential data, but certainly key employees shouldn’t have the ability to copy things like that,” he said.

He also said it would mean that data transfers like the one in the case would have to be done via email or similar format, which could be tracked. 

“It makes things a little more difficult for day-to-day use for innocent employees but, then at the same time, a policy and a practice like that help to prevent the free flow of trade secrets or confidential information from just wandering out the door unnoticed," Andrews said.

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Eastern Division of the Northern District of Illinois Jackson Lewis P.C.

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