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Use Zoom, Lose Trade Secrets. Yikes!

Author: Milton Springut & Tal S. Benschar – Law.com

…Smash Franchise Partners, LLC v. Kanda Holdings, Inc. (2020), deals with a trade secret owner who used the popular conferencing site Zoom to present information to potential franchisees but failed … to take “reasonable efforts” to maintain confidentiality of the information, and any trade secret protection was lost…
…DS Parent v. Teich, 2014 WL 546358, *9 (N.D.N.Y. 2014), the court held that the plaintiff’s pricing information was not protected as a trade secret, because the information was stored on computers that were not password-protected and were available to all employees with computer access, including non-sales personnel in the engineering and laboratory departments…
…When workers work at home, trade secrets can be exposed to family and friends who do not work for the company and owe it no duties. Businesses should consider and implement policies directing employees not to access or discuss trade secrets or confidential information in the presence of others in their homes, and limit access to their work accounts…

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Editor Comment:

The matter and article highlight the increased risk that corporate trade secrets and confidential data may be disclosed by the largely remote corporate workforce. I appreciate the well-structured guidance and concrete action steps proposed. The authors recommendation to perform an IP audit is a good starting point. However, I would add the need for automated categorization solutions that flag and highlight files and communications that contain potentially confidential IP. Forcing users to endure online training or lectures on trade secrets typically have a low success rate without proactive classification and rules. In the past, my clients have had to bring in expensive enterprise solutions or manually create email/firewall/EDP rules to keep IP inside the corporate envelope. These approaches had to focus on known high risk departments/users/sources. Today we have a lot more options. The new M365 Records Management module provides many more hooks for customers and partners to automatically classify and act on important data.

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