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Is Your Company Using “Trojan Horse” Evidence in Trade Secret Theft Cases? | FFS Insights

by Arash Beral and John D. Stanley

A company’s internal, secret documents can contain some of the most lucrative information, information that may be especially rewarding to a competitor. As all businesses are aware, someone with access to this information (usually a departing employee) could easily harm the business by poaching clients, offering more competitive pricing, and using the very methods and processes that once helped give the company its competitive edge. Like it or not, this is an inherent risk in every business or employment relationship.

As lawyers, clients oftentimes approach us with the following plea for assistance: “Help! Employee X quit and is contacting our clients. What can we do?” We first engage in an examination of the company’s customer lists to determine if they constitute protectable trade secrets, which is an issue of increasing scrutiny by the courts. Assuming the company maintains protectable trade secrets, we then ask what evidence, if any, does the client possess that Employee X took and is using company trade secrets to contact clients.

While many companies have robust monitoring software and processes in place that enable us to immediately run to court with evidence of misappropriation in hand, others don’t. In addition, defendants are increasingly becoming skilled in the art of taking information without leaving a digital footprint: by snapping photos of the company trade secrets with their personal phone, for example. In that case, the company is left with little to no recourse but having to contact its clients to ask them whether they would testify for them in court against the departing employee – not an ideal situation!

There’s a solution to this problem, however — the Trojan Horse.

The Trojan Horse idea is simple. A company includes “disguised” contact information, such as email accounts, telephone numbers, etc. for “disguised” clients on their trade secret lists. This “disguised” information leads back to the company’s high-level officers. If the company gets a competing solicitation directed to one of the Trojan Horse accounts, the company knows of — and, more importantly, has immediate evidence of —misappropriation.

The Trojan Horse trick provides the company readily accessible documentation evidencing both theft and the identity of the person engaged in the misappropriation. This evidence enables us, as lawyers, to immediately seek an injunction and other relief against the misappropriating party. If you have a valuable trade secret list that contains contact information, consider some creative new additions. It could pay off big down the road!

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This article is made available for educational purposes and to provide general information on current legal topics, not to provide specific legal advice. The publication of this article does not create any attorney-client relationship and should not be used as a substitute for competent legal advice from a licensed professional attorney.

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