Even largest employers exposed to employee trade secrets theft

Apple. Rio Tinto. Du Pont. They may be household names in the region, but that didn’t protect them from damaging trade secrets disputes with employees.

Even largest employers exposed to employee trade secrets theft
Even large and well-known employers are at risk of employee trade secrets theft, with HR advised to play a role in building a holistic approach to protection.

ATMD Bird & Bird employment practice head Susan de Silva told HRD Singapore there have been a spate of recent high profile trade secret cases in Asia.

In an ongoing dispute, Taiwan Semiconductor Manufacturing Company is suing a former R&D employee on the suspicion trade secrets were leaked to Samsung.

Likewise, Japan’s Nissan is involved in a case against a former temporary worker at the carmaker arrested on charges of stealing company trade secrets.

These followed cases in 2014 involving miner Rio Tinto, DuPont and Apple.

De Silva said opportunities to access, capture, use, and disclose confidential information have moved faster than many companies' awareness of the risks and implementation of measures to protect their confidential information.

“Confidential information used to be capable of being kept under lock and key. Now mobile technology has made it easier to access, capture, use and remove confidential information, inadvertently or intentionally,” de Silva explained.

“Mobility and flexibility in work locations have in general also increased the need for greater protection,” she continued. “Take for example, working from home; few companies currently have thoughtful measures requiring employees to safeguard confidential information in the home environment.”

HR managers need to work closely with other parts of their business – including senior management - to ensure trade secrets are adequately protected.

“No one thing will be sufficient; it needs a holistic program to be effective,” de Silva said.

“For example, a well-drafted confidentiality protection provision is fundamental, as are good provisions around termination and the return of information.

“These need to be supported by carefully planned physical and technological measures to protect confidential information, as well as regular reminders, training and awareness for employees regarding the importance of protecting confidential information, overlaid with great HR management and engagement.” 

De Silva said in the event of a deliberate theft of confidential information, companies must demonstrate a visible willingness to enforce. In many trade secrets cases, this means having no choice but court. “Trade secrets matters usually go to court; you are in a position of having to get a point of injunction.”

HR may not always be the key driver in trade secrets protection within an organisation, though they will end up being a key business partner.

“In many of these initiatives it really has to come from the top; management have to recognize what their assets are, and very commonly one of their assets is going to be trade secrets. If they recognize the economic value of these assets or the potential damage if they are leaked to a competitor, and really make that a priority project, then I think HR will have support with that,” she said.

Companies are best placed if they make protection of trade secrets a ‘conscious project’ within the organisation, according to De Silva.

“The points of risk should be considered – how and where trade secrets can be lost. Likewise, the contractual provisions the company needs to stay ahead of technology and the changing workplace. The business should implement physical and technological protections, as well as train and monitor employees.” 

Employers are also advised to ensure they are not inadvertently taking in confidential information from a competitor, as this could end up being  “very costly” from a damages and reputational viewpoint.

De Silva said in her experience, the wrongful taking of confidential information is driven by many factors, including employees not respecting the confidential information is not theirs to take, or an individual's own view that his ‘value’ is the competitive advantage the confidential information gives him.

Employees could even be placed in a position of conflict when new employers direct incoming employees to bring confidential information with them, or be involved in commercial espionage involving fraud and corruption.

Top trade secrets cases in 2014
  • Four Rio Tinto employees were found guilty of accepting millions in bribes and trade secret infringement, with prison sentences ranging from 7 to 14 years and fines between RMB700,000 and 5.2 million. 
  • US businessman Walter Liew was found guilty of conspiring with others to pay former Du Pont employees in return for trade secrets that were then sold on to Chinese state-owned company Pangang. 
  • Apple’s former global supply chain manager, Paul Devine, was imprisoned for a year and forced to repay US$4.5 million after conspiring with partner Andrew Ang to sell confidential information to Apple’s Asian suppliers and manufacturers so they could land better deals. 

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