What To Do When Everything is Not Enough

Your company has done everything it can to protect its trade secret. Its employees and the outside vendors to whom the trade secret is disclosed have been required to sign air-tight confidentiality agreements. Stringent restrictions, including computer encryption and security cameras, have been put in place to limit to whom and how one can gain access to the trade secret. Human resource programs have been put in place to conduct exit interviews and to have IT inspect workplace computer terminals when an employee who has had access to the trade secret leaves the company. And yet somehow your company’s trade secret is now being used by a rival to manufacturer or develop a competing product. What steps can your company take to minimize the competitive damage already being done to it and to keep that harm from spreading?

The natural instinct is to immediately file a lawsuit against the competitor and rush into court seeking a TRO or preliminary injunction to enjoin their activity. But haste is not always the best course of action in situations involving theft of trade secrets. Taking the necessary preparatory investigative steps before heading into court can make the difference between successfully stemming the economic harm at the outset of case and having that harm continue unabated as the case slowly proceeds to resolution.

Oftentimes the grant or denial of a preliminary injunction is the make or break event in litigation concerning trade secrets. Litigation can take months or years before coming to a resolution. But when a rival is using your trade secret to sell or develop a competing product for a market you have devoted precious resources to cultivate, a trade secret owner cannot wait that long to obtain relief. A preliminary injunction can place restrictions at the outset of the litigation on the rival’s operations, require the return of any stolen trade secret, and provide other measures that can serve as a powerful tool to restore the status quo before the theft occurred.

The bar to surmount to obtain preliminary injunctive relief, however, can be daunting. The most daunting is being able to show that you are likely to succeed on the merits at trial. Those involved in such corporate espionage usually take steps to cover their tracks, leaving little tell-tale signs of their theft and without access to what the rival is making or developing it can be difficult to prove that what the rival is doing stems from having gained access to your trade secret. Those evidentiary gaps can prove fatal when trying to convince a court that a trade secret owner is likely to succeed on the merits.

Those evidentiary gaps can be filled before filing suit by conducting, with the assistance of outside counsel, an intense internal investigation, including forensic examination of computers and interview of colleagues of any recent ex-employees who had access to the trade secret, to try to fill in these evidentiary gaps. When ultimately going into court, the trade secret owner should also seek for expedited discovery on core issues raised in its companion motion for preliminary injunction to be completed before the court rules on the motion.[1] Taking all these steps will place the trade secret owner in the best position to obtain preliminary injunctive relief to stop the competitive harm caused by the theft of its secrets.

The recent fight between Google and Uber over the development of self-driving automobiles provides a textbook example of this approach.[2] Google had spent a decade working on a self-driving automobile utilizing an internally developed LiDAR system, essentially a laser-based scanning and mapping system. From this work Google had developed not only a number of patents but also trade secrets, which it guarded with the utmost security: Restricting access to it on only a “need to know” basis, encrypting and requiring passwords and dual-authentication for access to any network hosting the trade secrets, placing stringent restrictions to physical access to facilities with access sites, and requiring all its employees, contractors, consultants, vendors, and manufacturers to sign confidentiality agreements before any trade secret was disclosed. And yet in 2016 Google grew suspicious that Uber had stolen its trade secrets, when newspapers reported that a company recently formed by a Google ex-employees who had just left the company had been bought by Uber for over $650 million in order to acquire the LiDAR system the company had supposedly developed in-house. Instead of immediately filing suit, Google began an internal investigation of this ex-employee. The investigation uncovered that in the months preceding his departure he obtained instructions on how to access Google’s design server holding detailed technical information, he installed special software on his Google-provided laptop to access the design server, download over 9.7 GBs from the server and migrated them to a SD card, reformatted the laptop to erase evidence of what happened, spoke to Google colleagues that he planned to take Google’s LiDAR system and make one of his own, and had met with Uber officials just after leaving Google. Google’s outside counsel also uncovered a regulatory filing Uber made with Nevada authorities shortly after acquiring the ex-employee’s company, confirming that it was developing its LiDAR system internally, rather than using (as most other companies in the industry do) outside vendors to develop. Google also was able to obtain a copy of one of the components Uber was using for its LiDAR system that replicated in nearly every respect the same component used in Google’s system.

After gaining all of this information, Google filed a motion for a preliminary injunction and sought expedited discovery. Because of all the preparatory work it had conducted, Google entered the court not grasping in the dark for information. It was able to call out for specific forms of injunctive relief that had a good chance of success, such as the return of the downloaded files and prohibiting Uber from using components that mirrored those found in Google’s system. Likewise it was able to tailor its expedited discovery requests to track down categories of information it knew would prove fruitful in supporting its claims.

Google’s preparatory steps were rewarded with the court granting its request for expedited discovery, ordering Uber to produce all files the ex-employee downloaded, the S-card reader he used to download the files, and all documents that forwarded, used or referred to the downloaded files as well as ordering Uber to submit three individuals for depositions with Google permitted to submit six document requests for each deponent. So when you believe your company’s trade secrets have been taken, before rushing into court, take the necessary preparatory steps so that when you come into court you have the best chance to obtain injunctive relief at the outset to stop the competitive harm flowing from the theft of your secrets.

[1] Most courts will permit for discovery to occur before the Rule 26(f) conference upon a showing of good cause. See Skylink Ltd. v. UniTek Global Servs., 2014 U.S. Dist. LEXIS 2503 (N.D. Ohio Jan. 9, 2014); Arista Records, LLC v. Doe, 2007 U.S. Dist. LEXIS 97283 (S.D. Ohio Nov. 5, 2007).
[2] Waymo LLC v. Uber Technologies, Inc., Case No. 17-CV-00939, United States District Court for the Northern District of California.