An Employee May Be Liable for Stealing Company Data, Even if She Does Not Use It

Posted by Jeanine Gagliardi on Wed, 02/26/2014 - 05:00

One legal tool available in most states for employers to address employee theft of company data is the Uniform Trade Secrets Act (“Act”). Maryland, Virginia, and the District of Columbia are among the jurisdictions that have adopted the Act. The Act creates a cause of action against a person who misappropriates another’s trade secret. Under the Act, a trade secret can be misappropriated in two ways:

(1) improperly acquiring the trade secret, such as by theft, misrepresentation, or espionage; or

(2) disclosing or using the trade secret.

A recent case decided by a federal court in Virginia highlights one reason why employers like the Act.

An employer need not prove that the employee actually disclosed or used the trade secret in order to make a claim for misappropriation.

The case concerned the taking of data by an employee that had, at the start of her employment, agreed that she would maintain the confidentiality of and not use the employer’s proprietary information. In November 2011, the employer notified the employee that she was fired, effective at the end of the year. Between November 2011 and the end of the year, the employee downloaded the employer’s data onto an external storage device and emailed it to her personal account. The employee did not have authority to download or email the data.

The employer sued the employee for misappropriation under Virginia’s Trade Secrets Act. The employee asked the court to summarily dismiss the claim, in part because the employer did not allege that the employee used or disclosed the data. The court rejected the employee’s request. In doing so, the court made clear that, to make a claim for misappropriation under the Act, an employer need not prove that the employee disclosed or used the employer's trade secrets. It is sufficient that the employee acquired them through improper means.

Although this case was decided under Virginia’s Trade Secrets Act, it is a good reminder to employers in other jurisdictions, too. Clear employee policies that govern the acquisition of company trade secrets can be useful to establish that an employee acquired the secrets improperly. Proving improper acquisition is sufficient to state a claim for misappropriation, without regard to whether the employee used the trade secrets.

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