By Karen Sutherland

Protecting trade secrets in the workplace used to be uncomplicated. Businesses would prohibit employees from taking work containing trade secrets home, visitors were required to check their bags at the front desk and security guards would look for people leaving with files. In my first trade-secret case as a litigator, the trade secrets were blueprints and were last seen in the trunk of a car where they shouldn’t have been.

Then came technology. First was the photocopy machine, which made obtaining confidential information easy because it could be duplicated without being physically removed. But it was possible to track the fact that someone had made copies, and they still had to be smuggled out of the workplace.

Then came the computer. Putting files on a disk and sliding them into a pocket is easier than photocopying them. With e-mail, it became possible to transmit trade secrets with a couple keystrokes. But technology exists to track e-mails though file servers and to check metadata, increasing the chance of getting caught.

The latest threat to trade secrets, the cell phone, is even sneakier because of its ubiquity and because it does not leave a trail in the workplace. With a cell phone, employees and visitors can take photos of new inventions, designs and documents, and the record of the trade secret theft leaves with them, or they can record conversations or music by pressing the button for their home number.

Is this legal? No. Does it happen? Yes.

The Uniform Trade Secrets Act (UTSA)1 forbids the stealing of trade secrets and Washington’s two-party consent statute regarding the interception and recording or divulging of private conversations forbids, in most cases, the taping of conversations without consent.2

Trade Secrets

“Trade secrets” is a term of art under the UTSA. It means information including a formula, pattern, compilation, program, device, method, technique or process that:

• Derives independent economic value, actual or potential, from not being generally known to, and not readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
• Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Trade secrets can include information such as customer lists, buying patterns, recipes, profits and other financial information, assembly methods, marketing plans, blueprints, methods for calculating or estimating costs and projects, and a wide variety of other information. The fact that the employee only took a copy of the information is not a defense to a trade secrets claim in most circumstances.

Trade secrets are protected under the UTSA even if there is no confidentiality agreement. However, a written agreement may make a violation easier to prove by showing that the company considered the information to be a trade secret, and an agreement can be broader than the UTSA.

Recording Phone Calls
The recording statute makes it unlawful to intercept or record any:

(a) Private communication transmitted by telephone, telegraph, radio, or other device between two or more individuals between points within or without the state by any device electronic or otherwise designed to record and/or transmit said communication regardless how such device is powered or actuated, without first obtaining the consent of all the participants in the communication;3

(b) Private conversation, by any device electronic or otherwise designed to record or transmit such conversation regardless how the device is powered or actuated without first obtaining the consent of all the persons engaged in the conversation.4

There are exceptions for wire communications or conversations: (a) of an emergency nature, such as the reporting of a fire, medical emergency, crime or disaster; (b) which convey threats of extortion, blackmail, bodily harm or other unlawful requests or demands;

(c) which occur anonymously or repeatedly or at an extremely inconvenient hour; or (d) which relate to communications by a hostage holder or barricaded person, whether or not conversation ensues. These may be recorded with the consent of one party to the conversation.5

Under the recording statute, where consent by all parties is needed, “it shall be considered obtained whenever one party has announced to all other parties engaged in the communication or conversation, in any reasonably effective manner, that such communication or conversation is about to be recorded or transmitted: PROVIDED that, if the conversation is to be recorded that said announcement shall also be recorded.”6

The statute also provides that: An employee of any regularly published newspaper, magazine, wire service, radio station, or television station acting in the course of bona fide news gathering duties on a full-time or contractual or part-time basis, shall be deemed to have consent to record and divulge communications or conversations otherwise prohibited by this chapter if the consent is expressly given or if the recording or transmitting device is readily apparent or obvious to the speakers. Withdrawal of the consent after the communication has been made shall not prohibit any such employee of a newspaper, magazine, wire service, or radio or television station from divulging the communication or conversation.7

Thus, if 60 Minutes shows up on the doorstep with a recording device, it will be treated differently than a competitor or employee. Self-publishing raises some interesting questions that have not been fully addressed by the courts; for example, see the articles on blogging elsewhere in this publication.

What a Business Can Do
Develop policies that make it clear: 1) what trade secrets are; and 2) the need to keep them confidential. Emphasize not discussing trade secrets in public (including cell phone conversations and recordings), proper filing and disposal of documents containing trade secrets, not making unnecessary copies of trade secrets, maintaining confidentiality of computer files and security of laptops, PDAs and other devices, and not working away from the office using confidential information if the information cannot be secured.

• Do not include trade secrets in marketing materials or on a Web page.
• Put limits on employee blogs and check them for trade secrets.
• Do not include trade secrets in industry presentations.
• Sign a confidentiality agreement before sharing trade secrets with vendors or potential customers.
• Do not have trade secrets visible during plant or office tours.
• Take steps to prevent employees and others from using devices such as cell phones (with or without cameras) and PDAs to surreptitiously copy or record your trade secrets.
• Have employees sign confidentiality agreements. If an employee goes to a competitor, make sure the competitor knows about the agreement. Then, if the competitor uses the trade secrets, there is a cause of action against the competitor for tortious interference.
• Conduct training on confidentiality issues for employees.

The information in this article is a broad, general overview of a complex topic and is not legal advice, nor does it create an attorney-client relationship. Karen Sutherland is the chair of the Employment and Labor Law Practice Group at Ogden Murphy Wallace, P.L.L.C. and chair of the King County Bar Bulletin Committee. She can be reached at ksutherland@omwlaw.com or 206-447-7000.

1 RCW ch. 19.108.

2 RCW ¤ 9.73.030.

3 RCW ¤ 9.73.030(1)(a).

4 RCW ¤ 9.73.030(1)(b).

5 RCW ¤ 9.73.030(2).

6 RCW ¤ 9.73.030(3).