When Employees Commit Electronic Theft

In Business Law by Coolidge Wall

For business owners, holding an edge in the market depends on safe communication and storage of data and proprietary information. While theft of trade secrets once conjured up the image of cumbersome files bring stuffed into a briefcase, loss of essential data now occurs with the simple click of a mouse.

In August, two New York men were charged with compiling and stealing information from their employer with the intention of using it to start their own business. The info allegedly taken from their employer, Manhattan-based Flow Traders, included proprietary computer code, trade strategies, and valuation algorithms. According to the criminal complaint, the employees arrested had transmitted stolen information via email from their business to personal email accounts. Computer code was also transferred through a file sharing service. A third employee was charged with copying proprietary information without permission.

Data loss occurs every day from businesses that have no idea their profits are being compromised. In Ohio, criminal theft statutes may not fully protect business interests from loss of valuable information, but they help deter and punish those who step over that line. With the aid of counsel, employers can effectively use civil lawsuits to seek injunctive relief, collect lost profits from dishonest employees, and prevent the continued use and distribution of customer lists and other intellectual property.

In the New York case, the employees arrested transmitted stolen information via email from their business to personal email accounts. Computer code was also transferred through a file sharing service. A third employee was charged with copying proprietary information without permission.

In any competitive market, loss of sensitive information must be prevented as much as possible. every business owner should consider these data protection questions:

  • What business information do you have interest in protecting?
  • Does all of it require the same level of security?
  • What protections are in place, and where are there gaps?
  • Are authorized users of computers defined, trained and monitored?
  • What modes of security do you use, or should you use, including practices, software and hardware?

Proprietary data and trade secrets are stolen by employees every day. Are your secrets safe?