Author: Amy Wu

    4Create rewards programs that might include incentives and bonuses for keeping information secret, says Andrew Sherman, an attorney at the law firm of Dickstein Shapiro. “A lot of companies just need to take the time and make the awareness,” Sherman says.

    4Use technology to your advantage and implement protection programs and cyber security technologies.

    Richard Power, an expert on cyber crime, says there are a number of ways to make it harder for employees to snag company information. Power recommends firewalls, intrusion detection and “smart cards,” which when encrypted operate similar to the way ATM cards do at banks. Even though the cards are more expensive than using just an ID and password, hackers will have a harder time cracking them, Power says.

    He suggests that companies monitor which Web sites employees go to, not allow laptops to be taken home, and change pass codes frequently. Some companies have gone so far as installing computer access based on fingerprint or retina scans.

    4Create policies for which documents can be sent and received from hand-held devices such as the BlackBerry, says Amy Timmons, a corporate security expert at the Segal Co., a private actuarial consulting firm based in New York City.

    4Don’t stop at checking references; expand to checking credit and doing background checks.

    4Hire someone who serves as the gatekeeper for trade secrets to work with human resources and information technology in selecting policies to implement.

    4Key management should sign confidentiality agreements and have an attorney present when discussing important information. Experts especially recommend this for startups and smaller companies.

    4Before hiring a candidate, ask them if they have brought any contacts or trade secrets with them from their previous employer. Receiving that kind of information can get a company in trouble.

    “It’s very important that when companies bring people in a company that they make sure they have been scrubbed,” said William Rooklidge, a lawyer specializing in intellectual property at Howrey LLP in Irvine, California.

    4Define what information constitutes a trade secret and limit the information to select staff. Companies should restrict access to trade secret-related documents to only those people who need to know; track who is accessing those documents, and when. Changes to those documents should also be audited, says Segal’s Timmons.

First the bad news: In the age of high tech, employee theft—especially when it comes to trade secrets—is more common than companies would like to admit. Free e-mail accounts from companies such as Google and Yahoo, gadgets like the BlackBerry and an increasingly mobile workforce make company information more vulnerable than ever.

    “Information can fall into the wrong hands. Employees (can) lie or sometimes they unknowingly take things from their job, not realizing the secrecy of the information,” says Joseph Re, an intellectual property attorney at Knobbe, Martens, Olson & Bear in Irvine, California. “Employers need to be more vigilant than ever.”

    The issue recently was pushed into the spotlight because of events at Coca-Cola Co. Three people, including a Coca-Cola employee, were charged with attempting to steal the company’s formulas, including a new drink, and selling that information to Pepsico for $1.5 million. In this case, Pepsico blew the whistle to authorities, leading to the arrests and subsequent charges. But not every case will have a happy ending.

    For companies, the bottom line is at stake. Employee theft can cost companies anywhere from $200 million to upwards of $1.2 trillion annually, according to the Segal Co. Twenty percent of businesses fail every year because of internal theft and fraud, according to the U.S. Chamber of Commerce.

    Now the good news: Although intellectual property experts say there is no way to completely protect a company from theft, there are innovative ways to prevent damage.

    Profiles International Inc. of Waco, Texas, plans to release several new products by the end of the year to add to an existing suite of employee screening services. A product called Employee Engagement Assessment gauges employees in six categories. The product also dissects the company’s culture and places it in four different categories: relationship-based, innovation-based, process-based and transaction-based.

    There is a link between employee theft and employee attitude, says Jim Sirbasku, CEO of Profiles International. “The less engaged a person is, the more they are apt to see the company as a non-personal thing, and the more apt they are to take something,” he says.

    Reference checks and even background checks aren’t enough today, experts say. Companies need to keep close tabs of their employees after the honeymoon period.

    “Usually people engage in theft for financial reasons, or at times in their life when they are facing great stress,” says Thomas M. McInerney, an attorney specializing in labor and employment at Thelen Reid & Priest in San Francisco.

    There are businesses that specialize in creating trade-secret protection programs for companies. Consor Intellectual Asset Management in La Jolla, California, creates information protection programs for companies to help them make the most money from their intellectual property. Consor also helps firms that have fallen victim assess the damage done.

    What it comes down to is that companies need to spend the time and money to hire the right people at all levels.

    “It’s not ‘Hey, this person is just an administrative assistant.’ It is what responsibility does this person have,” says Jason Morris, COO of Background Information Services Inc.

    Also, companies should be “prepared financially and emotionally to go after someone who steals a trade secret,” says Don Kelly, CEO of Intellectual Asset Management Associates, an intellectual property consultancy based in Alexandria, Virginia. Trade-secret-proofing comes with a price tag (anywhere from $25 to $200 for a background check and as much as $50,000 for customized programs for smaller companies), but the investment makes up for the potential losses, Kelly says.

    If nothing else, smart companies show that they have taken the steps to keep the information under wraps.

    “It’s like in the movie ‘Jerry Maguire.’ There’s a line from Tom Cruise that goes, ‘Help me help you.’ The law works that way with trade secrets,” says Andrew Sherman, an attorney specializing in business growth with Dickstein Shapiro in Washington, D.C. “The stronger steps you take, the more likely the courts will give you protection.”