Trade Secrets - Even if You Didn't Use or Disclose Them You Can Be Liable

| Marcus, Ellen

A recent decision by a federal court in Alexandria, Virginia, illustrates an important point about the trade secrets laws that is often missed:  you can be liable even if you merely took your former company’s trade secrets (such as by downloading them onto your thumb drive) but did not use them or disclose them to anyone else.  That’s what a company executive in the Alexandria case allegedly did, and the court allowed her former employer’s claim that she violated the Virginia Uniform Trade Secrets Act (the VUTSA) (which parallels many states’ trade secrets laws) to go forward.

Jacqueline D. Marsteller was a Senior Vice President and Account Executive of ECS Federal, Inc., a government contractor.  She left ECS in December 2011 and began working shortly afterwards for another government contractor.  ECS alleges that, in the weeks before Marsteller left, she attached an electronic storage device (probably a hard drive or thumb drive) to her ECS desktop computer and then transferred highly sensitive and confidential ECS information to the device.

Time out for a word of caution to companies and company executives:  this is a very common fact pattern.  If you are an employee who is thinking of leaving your company, keep in mind that, perhaps with the help of forensic computing experts, your company will be able to retrace your electronic movements.  If you are a company that just lost an employee, you may want to retrace your employee’s electronic steps to make sure that you are not at risk of confidential or proprietary information falling into the hands of a competitor.

Now back to our show.  Marsteller contended that these allegations do not support ECS’s trade secrets claim against her because – even assuming that the information that she allegedly transferred were trade secrets – ECS does not allege that she used the information.  The court rejected the argument, observing that, by its terms, the VUTSA is violated whenever a trade secret is improperly acquired, regardless of whether the trade secret is ever used or disclosed.  Improper acquisition includes “use of a computer or computer network without authority.”  ECS alleges that Marsteller was not authorized to copy the information that she copied to external storage devices.  

You may wonder what relief ECS would be entitled to if it eventually proved that Marsteller improperly acquired (but not that she disclosed or used) its trade secrets.  It probably would not be entitled to money damages because how could it have been harmed if Marsteller simply has some of its trade secrets but hasn’t done anything with them?   But ECS could get a court order pursuant to the VUTSA for injunctive relief – including an order directing Marsteller to return or destroy the information.

Subscribe to receive blog updates via email