Stealing Trade Secrets? Go Directly to Jail / Do Not Pass Go / Do Not Collect $200*

Many companies have increased their attention to prevention of theft of trade secrets, as well as the prevention of many other kinds of data loss these days.  Indeed, in February 2013, the White House released its Strategy for combating the theft of trade secrets in the United States.  Kicking off the report, President Obama stated:

“We are going to aggressively protect our intellectual property. Our single greatest asset is the innovation and the ingenuity and creativity of the American people. It is essential to our prosperity and it will only become more so in this century.”

Part of the Administration’s strategy focused on enhancing domestic law enforcement’s ability to combat theft of trade secrets and improving domestic legislation, such as the Economic Espionage Act of 1996, 18 U.S.C. §§1831-1839.  (For a good discussion of the Administration’s Strategy report, see my colleague Emily Duke’s article, Administration Releases Strategy to Prevent Theft of U.S. Trade Secrets). 

Most companies who depend upon the ability to protect their trade secrets to maintain a competitive edge in the market are watching closely to see what happens now.  A Criminal Complaint issued on June 4, 2013, in the United States District Court, for the District of New Jersey, against a former employee of Becton, Dickinson & Company (“BD”) certainly demonstrates that law enforcement is taking theft of trade secrets seriously.

In United States of America v. Ketankumar Maniar, the government alleges that Maniar (the former BD employee) had access to BD’s trade secret information and that while still employed took actions to steal that trade secret information.  The Complaint further alleges that Maniar took the information in many different ways including, downloading close to 8,000 BD files containing BD trade secret information to multiple external hard drives and thumb drives and emailing BD trade secret information to his personal email account.  Apparently, there is evidence that Maniar was planning to take the BD trade secret information with him to India – although that action has been thwarted by his arrest.

In addition to the former employee’s actions relating to how he took information, what might also be of interest to our readers is the focus by the government on the steps BD had taken to protect its trade secret information.  The government focused on the following:

• BD had a Code of Conduct that addressed protection of trade secret information which Maniar had signed off on and acknowledged was a condition of his employment with BD.
• BD required that Maniar sign an Employee Agreement which acknowledged his obligation to protect trade secret information. 
• BD maintained a Trade Secret Protection Policy that was incorporated into the Employee Agreement.
• BD maintained physical and electronic security of its trade secret information, including, with limited or restricted access to certain information.
• BD conducted training to remind employees of their responsibilities to protect trade secret information.

This case serves as a reminder that taking affirmative steps to protect trade secret assets will provide a greater opportunity in either a civil or criminal context to obtain relief from the legal system.  It also serves as a reminder that companies should be mindful that some employees will disregard their obligations to the company and take information to benefit themselves or others.  We have been advising clients, as well as writing, about this for years (See e.g. Recent Survey Shows That Employee Theft of Confidential Information is Rampant).  Technology certainly makes it easier for employees to walk out the door with confidential information.  When in doubt about what to do – contact your legal counsel, or one of the lawyers in our Trade Secret group.

In the meantime, we will keep on eye on what is happening.  As always, we welcome your input.

(*Monopoly is a trademark of Hasbro)

I.B.M.’s CEO on Management, Big Data, and the Power of Today’s Technology

“Big Data” means different things to different people.  In a March 7^th, speech, Virginia Rometty, Chairman, President and CEO of IBM, provided her take on “Big Data” and I thought she relayed a number of interesting points.  Her speech, entitled Competitive Advantage in the Era of Smart, describes a new way for private and public organizations to compete in an era of “Big Data” – data in the clouds, data on smart mobile devices and social networks, and corporations mining data for insights and the competitive edge.  To her, “Big Data” is the next natural resource, like oil or electricity, to propel this country forward as everyone will have access to cloud infrastructures, mobile devices and social networks.

Ms. Rometty suggests three “principles of change” – change, not just in technology, but in an evolution of an organization – a cultural way of thinking and acting.  All organizations make decisions about capital, people, products and services; create value for those individuals and entitles; and deliver value to its customers.  Ms. Rometty laid her principles of evolution out as:

1. Decisions will be based not on “gut instinct,” but on predictive analytics;
2. The social network is the new production line; and
3. Value will be created not for “market segments” or demographics, but for individuals.

Let’s look at each principal enunciated by Ms. Rometty. 

Principle 1:  Decisions will be based not on “gut instinct,” but on predictive analytics

In today’s global community, Ms. Rometty believes that enterprises should move to an analytical decision making model.  Why is that?  Because every two days we generate the equivalent of all of the data produced up to 2003.  With the volume of this data and today’s raw computing power organizations can and should harness this duality to produce accurate and insightful knowledge-based decisions.

Ms. Rometty believes that organizations must use analytical decision-making models to reduce errors, and inadvertent or damaging outcomes.  As proof, she pointed first to a global survey of top risk managers that identified the #1 method for identifying and assessing risk – senior management intuition and experience.  And second, to the greatest recession of our lifetime –which many believe was caused by an inability to see and manage risk.  To illustrate her point, Ms. Rometty cautioned that many of our decisions are subconsciously influenced by our biases – relying too heavily on a single piece of information we have internalized.  For example, a doctor hears a patient disclose two or three symptoms out of many, and then makes a diagnosis while discounting those symptoms that do not fit into her predetermined category.  The key point to this analytical decisions making model is that:

“[t]his isn’t just a change in tools.  It’s a change in mindset and organizational culture.  Which is also the greatest challenge it poses: the need to “unlearn” deeply engrained professional and leadership assumptions: . . . How you manage enterprise risk . . . and how you manage an enterprise.

Ms. Rometty believes the mentality will be not just to learn new skills, but to learn a whole new job.  So will we be willing to do that?  And how quickly can such predictive analysis be created?  Will executives be willing and able to wait for that analysis – I personally don’t think we are there yet.  It certainly seems that we all are relying upon gut instinct every day…this would certainly be a hard thing for me to overcome.

Principle 2:  The social network is the new production line.

Create intellectual capital!  What does that even mean?  According to Ms. Rometty, the vast amount of data now produced, the power of the computers, and today’s shared connectivity have now created the means for the production of knowledge – with social networks as the new production line.  “In a social enterprise, your value is established not by how much knowledge you amass, but by how much knowledge you impart to others.”  So how do you produce knowledge?

The long-term objective is an enterprise expertise model where information is analyzed automatically, content is organized in relevant topics and personalized action plans are created – and where rewards are shaped by who contributes the most and best ideas.

The goal is not to just share information – the connectivity – but actually create experts in an organization.  Anyone in an enterprise can become an expert.  Could every company, however, hire, compensate, evaluate and promote employees based upon the concept of “shared and catalyzed knowledge”?  Ms. Rometty believes most can and will.  Every IBM employee now has a social network page, and access to vast amounts of internal and external information sources, blogs and wikis – the ability to create intellectual capital.  According to Ms. Rometty, IBM is working toward a future -

in which all IBMers will be rated by their peers and profession, based on how good they are at sharing their knowledge . . . how good they are at making it useful, consumable . . . how well they contribute to the community and to [their] clients’ needs and experiences.

I certainly agree that the ability to communicate, contribute and share is going to be a key factor to success in future organizations!

Principle 3:  Value will be created not for “market segments” or demographics, but for individuals.

The rapid emergence of Big Data, social networks, mobile communications, and location tracking software has lessened the inherent value of segmenting consumers – whether public consumers of government services or private consumers of business.  “I” and “You” bear today’s fruit.  It’s the age of the individual.  Today’s technology has created the ability for enterprises to track individual wants, needs and desires, and then to encapsulate that into a good or service targeted to that specific consumer. 

In her speech, Ms. Rometty gave the example of how President Barack Obama’s re-election campaign used Big Data analytics and behavioral science to understand how individual voters in key states might react.

Using dynamic modes powered by voter contact data, the campaign’s Analytics team ran 66,000 simulations each night to protect who was winning every battleground state.  They used this data to allocate resources-funding, campaign workers, outreach – in real times.  The final simulations of the Ohio vote were accurate to within 0.2 percent.

Companies now must recognize the emergence of this capability to remain competitive in the global market place.  Forward-thinkers will use this data and computational ability to actually learn what “You” and “I” want – not what some organization deems “we” want.  Ms. Rometty believes, in the end, that organizations and consumers will offer each other measurable value – information about “You” and “I” in exchange for a benefit in return.

Virginia Rometty concluded by saying:

[t]he challenge is not the technology.  The challenge, as always, is culture . . . changing our entrenched ways of thinking acting and organizing. . . .We have, in Big Data, a vast new natural resource, as well as the means to mine it for value.  And that is unleashing not only insight and knowledge, but new ways of creating business and societal value . . . and new ways of working that are more flexible, innovative, collaborative, humane.

Erik Brynjolfsson, director of the Center for Digital Business at MIT’s Sloan School of Management, echoed Ms. Rometty’s sentiments.  (see New York Times, I.B.M.s Rometty on the Data Challenge to the Culture of Management).  “The technology has been available for a few years now to create a management revolution based on big data, and now we’re beginning to see more and more companies undertake the much harder job of reinventing their business process and culture to take full advantage of those technologies.”  Based upon the number of targeted ads that we are seeing, I am pretty confident a number of organizations have embraced this last concept! 

So what does this mean for you as an individual or an organization?  Do you agree that you should disregard your gut instinct and replace it with a “computerized” risk analysis?  Do you share and create knowledge and information to increase your market share and demonstrate your expertise – whether via social media or otherwise?  And finally, what do you think of the individually targeted culture being created by all of the data mined by organizations?  I admit that I don’t know where I stand.  As always, we welcome your input!  

A Checklist for Corporate Directors and the C-Suite: Data Privacy and Security Oversight

My colleague Steve Helland and I were talking this week about data privacy and security at a meeting of the firm’s Privacy group.  Steve chairs the firm’s  Internet, Technology & E-Commerce group and he recently co-chaired a full day conference Data Privacy and Security for In-House Counsel for the Minnesota State Bar Association.  Our group discussed Steve’s takeaways from the conference and I asked whether we could post his summary of the event on the blog.  As you can see, Steve agreed. 

The following post and checklist were written by Steve Helland and adapted from his presentation on March 21, 2013 at the MSBA data privacy and security conference.  Many thanks to Steve for his contributing post…

You can’t do it all, in a field as robust and evolving as data privacy and security.  The purpose of this checklist is to describe the core oversight duties of those in the board room and the C-suite, as-of spring 2013.  As such, this checklist is focused primarily on setting values and priorities, and the assignment of roles, structure, and process.

Please note: (1) There is no one-size-fits all, so consider the unique circumstances of your organization;  (2) Although much has been written about privacy and security generally, law and scholarship specifically regarding the duties of the board and senior management regarding privacy and security issues is significantly less developed.

□        Decide, preliminarily, the relative importance of privacy and security issues to your organization.

Comment: Consider the following:

(1) Are you in a highly-regulated field such as finance or healthcare?

(2) Do you control or have access to large amounts of data?

(3) Are trade secrets or other proprietary information especially valuable assets?

(4) Importance of customer expectations and public perception?

(5) What are your competitors doing?

(6) Any known substantial and specific threats / risks?

Benchmark:  Corporate directors (48%) and general counsel (55%) listed “data security” as their number-one concern (ahead of operational risk and company reputation).  Source: 2012 Corporate Board Member / FTI Consulting, Inc., “Law and the Boardroom Study: Legal Risks on the Radar.”

□        Allocate reasonable financial, human, and technical resources.

Comment:

(1) Do you have confidence in your IT team / CIO?

(2) Do they have a sufficient budget?

□        Philosophy: Treat trade secrets, “Big Data,” and other critical proprietary information with the same level of care and attention you devote to the preservation and growth of other core assets. 

□        Appoint a [Chief Privacy Officer (CPO)][Chief Information Security Officer (CISO)][other management-level person with “privacy and security compliance” as an explicit or sole component of the job description].

Comment:

(1) For this item, like virtually all others on the checklist, the minimum duty will vary with the size of the organization and the quantity and type of information and data held (including whether the industry or data-type is regulated, such health organizations under HIPAA or financial organizations under Gramm-Leach Bliley, or any entity collecting information from children on-line under COPPA.

(2) This person should monitor for compliance requirements: (a) applicable law; (b) contractual obligations (e.g., in NDAs or security provisions in other agreements); (c) your own policies; (d) certification / compliance programs in which you participate (e.g., EU Safe Harbor, TRUSTe); (e) industry norms, as following short may be negligence).

Benchmark:  Among smaller and mid-size organizations, a dedicated Chief Privacy Officer is still relatively rare. 

□        Retain [or at least identify] experienced legal counsel. 

Comment:

(1) Receive updates on legal developments from time to time.

(2) Involve in substantial transactions such as M&A and key vendors.

(3) If there is a substantial international component to your data and security issues, strongly consider retaining country-specific or region-specific legal counsel.

□        Retain [or at least identify] computer forensic consultants; other consultants such as PR. 

Comment:

(1) In the event of a breach and/or an event that may involve litigation, I recommend an outside computer forensic firm.

(2)  This item may be most appropriate for larger organizations.

(3) This item is more appropriate to a CIO or General Counsel, and not the board-level.

□        Assign a committee of the board with oversight of privacy and security issues, and explicitly add responsibility for privacy and security to the committee’s charter.  Consider creating a committee if no appropriate committee exists.  (e.g., a “Risk Committee” (or similar) for which privacy/security could be one aspect of enterprise risk.)

Comment:  Applicable for larger entities.  This could also be housed in a Risk Committee, Compliance Committee, or other committee of the board.  Smaller entities may prefer keep this function within the full board. 

Benchmark:  Among Global 2000 entities, 96% have an Audit Committee, 56% have a Risk / Security Committee, and 23% have an IT / Technology Committee. Source: “Governance of Enterprise Security: CyLab 2012 Report,” Jody R. Westby.

□        Receive information.  The board and senior management should receive periodic reports and information from the CIO, IT and General Counsel regarding significant security risks, issues, breaches, and other items.  

Comment: The board of directors and senior management should receive enough information to be familiar with the organization’s top privacy and security issues and how the organization is managing those items.

□        Conduct an audit.   Include administrative, technical and physical elements.

Comment:

(1)  Oversight by full board or a committee such as the Audit Committee.

(2)  Self-audit vs. outside audit?

(3)  Brand-name audits such as (old) SAS70 (new) SSAE 16?

(4)  If possible, benchmark your organization against similar organizations to avoid falling behind (negligence for failing to meet industry-standard).

(5) Do you know what your own policies are and do you follow them?

(6) Do you comply with contractual or similar obligations to others (e.g., abide by NDAs; Payment Card Industry requirements).

(7) Focus on the most important assets.

□        Written policies.  Then communicate and train.

Comment:  Include policies required by statute.  General privacy and security (e.g., passwords, employee termination / departure).  Other appropriate policies may include: Employee Privacy; “Written Information Security Policy” (see Massachusetts law); Breach policy;  Backup and disaster recovery; Online / website privacy policy (see California law);  Cyber-attack.

□        Agreement tool kit.

Comment:  Make available solid templates for: NDAs or similar with employees, vendors, partners.  Specialized agreements as required such as Business Associate Agreements under HIPAA.  The agreement tool kit should be disseminated to appropriate personnel with contracting authority, along with training in how to use, plus report and track exceptional terms and requirements.

□        Diligence on key vendors and partners.  How are their practices?  Any breaches?

Comment:  This may be as simple as a Google search: you don’t want to be partners with a known data-bungler.  Include privacy and security diligence as part of M&A and other major transactions.

□        Review insurance coverage.

Comment:  Is general liability, errors and omissions sufficient?  Consider “cyber risk” or “privacy liability” coverage (there’s a difference between these two).  Be cautious regarding exclusions, especially “force majeure” / “act of God/war,” in light of foreign-government-sponsored hacking. 

Benchmark:  Only 35% of public companies have cyber insurance.  Source: Chubb 2012 Public Company Risk Survey.

□     Revisit privacy and security issues from time to time; stay current.

□     Insure at least one member of the board is knowledgeable in IT issues.

Comment:  If your full board still isn’t sure what the Internet is and doesn’t use email, they will not be in a position to critique inputs on all of the above.

Thanks so much to Steve for his contributing post!

We are addressing data privacy and security with our clients on a regular basis in many different areas and industires (e.g. employment and trade secret –  healthcare and financial services, and many more).  So now that you have gone through Steve’s checklist, where do you all stand when it comes to data privacy and security?  As always, we would love to hear from you.

Business Risks and Smartphone Apps – Is Your Data Safe?

We have been discussing the risks personal devices can pose for business data corruption, loss or theft quite a bit of late.  These issues were also highlighted at the RSA Security Conference (a gathering of security industry experts) and we have focused our attention to online security, personal information privacy, and business data risks. 

So, let’s review.  In IBM’s Plan to Manage Smart Phone Security Issues – Not Just About “Is Siri and Apple Spy?”, we reviewed different protocols and procedures for managing employee use of personal electronic devices.  We talked about the need for businesses to recognize and adapt to a corporate life with BYOD because – let’s face it – personal devices are here to stay.   We firmly believe that with policies, education and training  employees should at least gain a minimal understanding of the potential security danger of commingling personal and business data, the vulnerability of unauthorized electronic intrusions (See our post: And Yet Another Security Risk to Mobile Devices . . . Malware), and the ultimate cost to a business for lost or stolen data, including trade secrets.  These steps can also protect your organization should you be required to remote wipe a device that is lost, stolen or “removed” by a departing employee. 

What we have seen, unfortunately, is that even with the best policies, education and training, no service or device is fully secure – whether the result of state sponsored hacking of U.S. companies by other governments, or cyber intrusions by groups like Anonymous.   Security vulnerabilities exist.  This is but a short list of some of the recent security breaches:  Google’s two-step login verification process was bypassed allowing control of a user’s account; Evernote, a Web-based note-sharing service, reset 50 million users passwords following an attack into users’ accounts; Facebook, Apple, Microsoft and Twitter have reported recent cyber-attacks;  Like Evernote, Twitter reset the passwords for 250,000 accounts whose encrypted passwords may have been accessed; and Dropbox, an electronic storage service, reported a large loss of data for a number of subscribers. (For more information, see NBC News, Evernote resets 50 million passwords after hackers access user data, Google patches ‘loophole’ in two-factor verification system, and His firm accused China of hacking the US; now he awaits the consequences).

The problem is that once an employee removes corporate data from the network, protecting and securing that data becomes much harder.  “My peers are killing me,” John Oberon, information technology chief for Mashery, a 170-employee company that helps other companies build applications, reported to the New York Times, Where Apps Meet Work, Secret Data Is at Risk.  “[T]here’s only so much you can do to stop people from forwarding an e-mail or storing a document off a phone.”  (This is still one of the main ways employees take data…)  And employees will find their own ways to connect with one another.  Indeed, Netflix recently found its employees using 496 applications for data storage, communications and collaboration.  Yikes.  “People are going to bring their own devices, their own data, their own software applications, even their own work groups,” said Bill Burns, director of information technology infrastructure at Netflix.  The question becomes what are you doing as an organization to monitor, limit or otherwise control what employees are doing on their devices?  Is it enough?    

And what if the security dilemma is really not the employee’s fault?  HTC America, a global manufacturer of devices, recently settled a complaint with the Federal Trade Commission.  The FTC alleged that HTC America failed “to take reasonable steps to secure software” in its Android, Windows Mobile and Windows Phone smartphones and tablets.  According to NBC News, HTC subject to 20 years of security reviews because of holes, the FTC reported that “[t]he company didn’t design its products with security in mind.”  “HTC introduced numerous security vulnerabilities that malicious apps could exploit to gain access to sensitive data and compromise how the device worked.”  Even worse, the FTC alleged “HTC pre-installed a custom app that could download and install apps outside of the normal Android permission process.”  To settle the FTC matter, HTC America agreed to create and push software patches to millions of its mobile devices, and to accept independent security assessments for the next 20 years.  This case represents the first time the FTC has pursued a mobile device company over security concerns, or ordered a company to create and push a software fix as part of a settlement.

In the end, whether caused by employees or by device manufacturers, security issues cost businesses money.  Security concerns can waste valuable IT time and money, and more importantly hurt a business’ reputation with its customers.  So, what are you doing?  I have been talking with CIO’s and industry experts to gain different perspectives and options for addressing data protection and security concerns.  I will post some conclusions and suggestions in the weeks to come.  In the meantime, we would love to hear what you are doing.

Productivity and Technology – A Marriage Made in Heaven? Maybe Not

We have talked in the past about whether use of social media during the workday increases employee productivity (see Time Suck or Morale Booster? How Does Social Media Impact Employee Productivity?)  The question of technology and productivity was recently addressed in a little different light by Randstad, a global provider of HR and staffing services in its most recent Employee Engagement Index survey (see Does 24/7 Connectivity Equal Increased Productivity?).  The survey looks at whether constant connectivity through technology equates to greater productivity for women workers.  The survey shows that 42 percent of women and 47 percent of men believe that it is increasingly difficult to disconnect from work while at home.  The majority (68 percent) of women and (59 percent) of men also did not believe that the work/home connectivity had increased their productivity.

“As enhanced technologies and increased access to information continues to blur the lines between our professional and personal lives, many workers mistake being busy for being productive,” said Linda Galipeau, Randstad CEO of North America.  “These are two very different concepts that when looked at from an organizational standpoint – could have serious implications for a company’s bottom line.  We are only productive if we’re producing the results that are most impactful to our goals.  Being that we live in a multi-tasking world, it is important to work smarter and hone in on those high-impact efforts that will create more meaningful results.  This is incredibility important, especially as women and men can now perform their jobs from almost anywhere.”

So what does this actually mean for you and me?

Whether men or women, we all certainly fall into the trap of a 24/7 work environment.   I am sure you would agree that the clock is hard to turn off – whether at 5:00 p.m. on a regular workday, or while on “vacation” with the family.   The reality is that technology has enhanced connectivity and increased the expectation of instant communication – peer to peer, business to client, supervisor to employee.  Good or bad, business now moves at a rapid pace.  Technology shapes our workplace and drives continuous access to the office.  “There’s also a downside to this culture because sometimes workers feel that in such a fast-moving environment, they’re obligated to be available at all times and that by disconnecting, you risk falling behind at work.”  Kristin Kelley, Randstad’s executive vice president for marketing reported to the Boston Globe, Does technology make us more productive workers?.  But in the end, technology, like all things intense, can (if you let it) lead to burn-out, undue stress, health and wellness issues, and a poor work/life balance. 

Can we unplug?

Certainly – the choice is ours.  We, and I am as guilty as anyone, must recognize that by disconnecting once in a while we will achieve a greater work/life balance.  When we do – we recognize that balance produces better work and home relationships, lowers the intensity of the work day, along with our stress levels, and refocuses our efforts at work (making the work we do more productive).  Disconnecting, however, proves incredibly difficult to achieve.  It’s easy to say I am not going to answer that work email at night, or look to see who is calling on a Saturday.  The difficult part, like any addiction, is to put the proverbial rubber to the road.  I try – admittedly only sometimes.  But, more often than not, I answer that email, check that phone message, or see who just texted in the middle of the night – because my phone is right next to my bed.   I am bound by and “addicted” to the power of instant communication.  But the question remains whether the instant communication actually increases productivity, or whether I am simply lost in a world of “constant partial attention” (a term introduced to me by one of my clients, Paul DeBettignies, IT Recruiter and author of the Minnesota Headhunter Blog.)  It’s a good question to ponder.

So, how do you unplug?  When you do, does it increase your productivity and your work/life balance?  Let us know what you think.

Recent Survey Shows That Employee Theft of Confidential Information is Rampant

According to a recent survey by Symantec, roughly “half of employees who left or lost their jobs in the last 12 months kept confidential corporate data” and “40 percent plan to use it in their new jobs.”

That headline should be enough to stop any employer in their tracks.  But there’s more.  Not only did employees take confidential information from their employers, they apparently didn’t even feel guilty about it.  On the contrary, 51% said it was “acceptable to take corporate data because their company does not strictly enforce policies” and 62% said that it is “acceptable to transfer work documents to personal computers, tablets, smartphones or online file sharing applications” with a majority saying they never delete such data “because they do not see any harm in keeping it.” 

Clearly, companies need to be doing more to protect their data and intellectual property.  Confidentiality and data security policies, while an important first step, are only the foundation to protecting confidential and trade secret information. 

As with many things in life, actions speak louder than words.  In addition to implementing appropriate policies, businesses need to back up those policies with actions.  It’s important that employees (and managers) receive training on what information is confidential, why it’s confidential, and why confidentiality matters to the company.  It is also critical that companies actually treat confidential information like it’s confidential, by, for example, implementing appropriate security protocols (i.e. passwords, restricted access, monitoring, etc.).  While these are basic steps, they are important and, according to the Symantec study, they are still too often being overlooked.

Another tool to protect your company’s confidential and trade secret information is to have your employees sign confidentiality and nondisclosure agreements.  Those agreements should be updated to reflect today’s technological advances, as well as to address new employee uses of technology.  Too often, employers don’t think about confidential or trade secret data stored on personal mobile devices or personal computers until after an employee has resigned or been terminated.  By then, it can be too late to get that important data back.

So what does this all mean to you?  In short, if appears from the Symantec survey that employees are still not getting the message about who owns your company’s data.  Therefore, if you don’t take additional steps to educate your employees and protect your confidential or trade secret information, it may just walk out the door.  What have you been doing to protect your data?  As always, we would love to hear from you.

How do you Respond to the Legal Risks of BYOD?

I had the pleasure of speaking at the Minnesota Mid-Market CIO Executive Summit, presented by Evanta, on January 31, 2013.  The topic of the discussion – Every CIO’s Potentially Overlooked Responsibility: The Unknown Legal Risks of BYOD and How to Protect Your Environment.  My presentation was sponsored by Renodis and I was joined in my presentation by Reynaldo Lyles, a Mobility Practice Leader at Renodis. 

Reynaldo and I had met several months before to discuss how we could collaborate and present on the topic of Bring Your Own Device (”BYOD”).  Reynaldo brings the technical expertise about how to best manage mobile devices, including controling data and information on mobile devices (See e.g. his blog post: The Real Costs of BYOD and How to Contain Them).  I, on the other hand, am much more focused on the legal risks associated with the use of mobile devices in the workplace and the practical legal solutions to those risks (See e.g. Discovery of Information on Personal Devices Still At Issue In Trade Secret Disputes).  Evanta’s CIO Executive Summit provided the perfect opportunity for Reynaldo and me to pair up to discuss this important issue.

I am certain that most of you either use a company provided mobile device (or several of them), or you use your own personal mobile device for work purposes.  If you are an employer, you probably have employees that do one or both.  So – what were some of the risks that Reynaldo and I talked about?  Our presentation touched on:

• E-discovery and data preservation issues – what happens to critical/relevant data contained on a personal device should a key witness in a piece of litigation, or a potential claim, leave the company?
• Overtime considerations – permitting employees to use personal mobile devices will likely increase claims for unpaid overtime if employers have not thought about how best to track, record and pay for that work time.
• Harassment and discrimination – if employees are interacting with each other on personal devices, will this make it harder for employers to monitor that interaction to ensure that employees (and supervisors) are following the employer’s policies?
• Privacy concerns – with the use of a personal device, there will necessarily be a mix of personal and work information or data on the personal device.  What policies do you have in place to insure that you have the right to access the data on the device and what precautions, if any, have you taken to protect the personal private information?
• Monitoring content on personal devices – do you have the right to monitor content on a personal mobile device? 
• Confidentiality and loss of trade secrets – what right do you have to the personal device should the employee leave the company?  If the employee leaves “in the middle of the night” and takes the personal device, with all your company data, do you have the right (and the ability) to remote wipe the device, or a portion of the data on the device? 

Reynaldo and I agreed the first place to start with each of the legal risks above is a solid BYOD policy.  However, that policy should relate closely with the IT procedures that are being used on any personal device (that is, HR and IT and Legal all need to work together!)  The policy should touch on issues such as:

• Consent to remote wipe;
• Consent to audit/monitor;
• No expectation of privacy in the contents of the personal device;
• An acknowledgement that the use of the device is subject to other company policies, like anti-discrimination, codes of conduct, etc.; and
• What happens at termination of employment (spelling out how you get your data back).

Reynaldo offered the audience ideas about how to technically manage the data and information on the device.  He noted that Renodis could provide the mobility management tools to audit devices, monitor content and activity (in real-time or not), protect data or limit access (such as geofencing – establishing a virtual fence to keep devices in a specific area or to trigger a warning or action if they enter or exit the fence; or sandboxing – keeping corporate information separate from personal information), as well as tools or proactive policies which would remote wipe a personal device if necessary.  He noted, however, that before those mobility management tools are in place, you had better be sure to have your BYOD policy in place to help manage the legal risks!

Reynaldo and I had a great time talking about this topic and our audience had some great questions.  What issues are you facing with BYOD?  How are you dealing with them?  We would love to hear from you.

Can the Government Seize Your Mobile Devices at the Border? If so, What Happens to Your Company’s Data?

The federal government currently enjoys, and has historically held, broad powers of search and seizure of persons and electronic devices at border crossings into the United States.  The Fourth Amendment’s prohibition against unreasonable searches and seizures does not apply at the border – courts have based that governmental power on its interest in combatting crime and terrorism.  Recently, however, several cases have been filtering through the federal courts challenging the government’s broad powers at the borders.  According to the New York Times – Border Agents’ Powers to Search Devices Is Facing Increasing Challenges in Court, “several court cases seek to limit the ability of border agents to search, copy and even seize travelers’ laptops, cameras and phones without suspicion of illegal activity.”

As an individual or as a business, you might say: 1) my business does not take me (or my employees) outside of the United States; or 2) neither I (nor my employees) act like terrorists or associate with terrorist groups – so why should this concern me?  For the most part you might be right – the number of such searches is fairly small.  The New York Times reported that between October 1, 2011, and August 31, 2012, 11.9 million travelers were referred to secondary screening (an enhanced screening and interrogation process) upon entering the United States.  Of those chosen for enhanced measures, 4,898 searches included electronic devices. 

The Department Of Homeland Security disclosed to the New York Times its policy on electronic searches saying that “officers can keep these devices for a ‘reasonable period of time,’ including at an off-site location, and seek help from other government agencies to decrypt, translate or interpret the information contained.  If travelers choose not share a password for a device, the government may hold it to find a way to gain access to the data.”  So how long can the federal government hold your device and your data?  That is an open question.

In one federal case, House v. Napolitano, border agents at Chicago O’Hare Airport confiscated a laptop, camera and USB drive from David House, a computer programmer, and kept his devices for seven weeks.  The Complaint asserted the following: 

Plaintiff challenges as a violation of the First and Fourth Amendments the prolonged seizure of his laptop computer and other electronic devices and the review, copying, retention, and dissemination of their contents. Plaintiff also alleges that the materials seized by the government contain confidential information identifying members and supporters of a political organization, the Bradley Manning Support Network, and that Defendants’ review, retention, and disclosure of that information intrudes on the right of associational privacy protected by the First Amendment. Plaintiff seeks a declaratory judgment that the search and seizure violated the First and Fourth Amendments, and an injunction requiring Defendants to return or destroy any seized data in their custody or control and to inform Plaintiff whether that data has been disclosed to other agencies or individuals.

(You might recall, Pfc. Manning is the former military intelligence analyst accused of leaking documents to the group WikiLeaks.)  The Federal District Court in Massachusetts, already denied the government’s motion to dismiss the case.  The judge ruled the government did not need reasonable suspicion to search someone’s electronic devices at the border, but the power did not strip Mr. House of his First Amendment rights. 

In another example reported by the Times, Laura Poitras, a documentary filmmaker and recipient of a 2012 MacArthur Fellowship, estimated she had been detained at the U.S. border more than 40 times. After one trip abroad in particular, her laptop, camera and cellphone were seized by the government for 41 days, as well as having her notes and credit card copied.

The legal question remains whether confiscating an electronic device for days or weeks, and analyzing its data at an off-site location goes beyond a permissible border detention and search.  For many individuals, this question might not matter.  But companies who issue mobile devices to employees should care about this issue.  Many employees go on vacation abroad… and how many of those employees take your company provided mobile devices with them on vacation – whether a laptop, smartphone, or tablet?  Or maybe your company permits employees to bring their own device (“BYOD”) to work – and your confidential information is stored on your employees’ personal devices.  I certainly take my mobile devices with me.  And I would guess most, if not all, of your employees do the same. 

What would happen if, for some unknown reason, the government seizes your employee’s work computer or mobile device for weeks or months?  What personal or confidential business information might be compromised by such a detention and seizure?  Although this issue arises with relatively small frequency, it’s always important to think about the confidential information we carry around with us on a daily basis – whether we travel outside of the U.S. for business or pleasure or are simply running an errand to the local store.

This reinforces the need to secure your mobile devices and have contingency plans in place if they go missing, or as these examples suggest – the government seizes them.  Do you have a plan in place?  Do you have the resources and tools in place to manage and control the information on those devices?  Let us know what you have done.  As always, we look forward to hearing from you.

Where and When Do You Facebook?

Just when you thought that every news story these days must be fraught with calamity and strife….along comes a funny (ok, funny for a lawyer interested in social media) story in USA Today – Even When You Gotta Go, Social Media Goes Too – about how all things eventually change with technology.  The story focuses on the rise of social media use, and a recent social media survey conducted by NM Incite – a joint venture between Nielsen and the consulting firm McKinsey and Co. 

 What could possibly be so humorous in a social media study? 

Well, as the title of the USA Today story implies, the survey found that 32% of the heaviest users of social networks, ages 18-24, use social media while in the bathroom.  This new sit down experience apparently transcends most ages.  28% of users ages 25-34 and 15% of 35-44 year olds use vital bathroom time to update their social networks.  USA Today did not discuss the social media usage of those of us over 45.  I guess that means we must be relegated to the era of print newspapers and People magazine – but I am not so sure.  Both sexes reportedly are equally guilty of this new trend.       

Deirdre Bannon, vice president of social media solutions at NM Incite, summed it up:  “social media is truly everywhere in people’s lives.  It is so ingrained and has touched every facet of everything we do all day long.  We are literally taking our phones with us to the bathroom and connecting on social media.”  I suppose it is not surprising that social media users must use this time to connect on social media considering the sheer amount of time spent in social media forums.  The Nielsen survey found that if you combined all electronic devices (PCs and mobile devices) the overall time spent on social networks rose 37% last year.  Women spent an average of 18 hours and 20 minutes per month and men spent about 13 hours. 

The biggest users, the 18-24 year olds, spend more than 21 hours each month on social network sites.  (51% of this group are connected to social media sites during work hours.)  Most of the internet traffic is generated on mobile devices – usage increased by 85% for internet on mobile apps and 82% on mobile Web browsers – and nearly one-third (30%) of all time spent on mobile devices is spent on social networks.  The PC usage actually dropped by 4% to 204.7 million.    Bannon says, however, that “personal computers remain at the center of the social-networking experience and most of the time spent is actually there.”

So what does this tell us?  Our prediction came true – technology really is intersecting every aspect of our lives.  So, in light of that, please don’t tell me where you are when you next update your status!

Stormy Weather Up In The Cloud

Teresa and I love the fact that we work with incredibly smart, talented people.  Case in point, our colleagues, Asmah Tareen and Emily Duke, who recently published a fascinating article in the Star Tribune called, “Avoiding the Storms that Lurk in the Cloud”.  You can also read the article on our firm’s website. 

Asmah is a senior of counsel attorney at Fredrikson & Byron, and she works with both private and public companies in a variety of technology and emerging industries, particularly with companies that develop, implement and license software and mobile applications and provide products or services in the information technology, healthcare, and life sciences industries. 

Emily is a commercial litigator who helps high-tech, life sciences and service companies protect their trade secrets and mission-critical information.  Emily also chairs Fredrikson’s franchise and e-discovery groups.  

Honestly, I could fill up an entire blog post with the accomplishments of these women.  But, instead, let’s talk about their article.

The article provides a hypothetical case study illustrating the benefits and dangers of cloud computing as well as practical steps all companies should take if they are planning to move to the cloud.  I’m not going to give away everything in the article because I want you all to read it, but what really stuck with me was that while cloud computing is a powerful tool and an increasingly attractive option, as with many other things in life, with power comes responsibility. 

Businesses contemplating moving their sensitive company data to the cloud should take note of the best practices Emily and Asmah discuss in their article.  We’ve said this over and over again – working proactively and thoughtfully on the front end will be well worth the effort.

Is your business using cloud computing?  What has your experience been like?  Have you taken any of the proactive steps Emily and Asmah recommend?  We’d love to hear from you.