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MISHRM 2014 Annual Conference
HR Amplified: Driven to be…
PROTECTING THE COMPANY IMAGE
AND ASSETS
Jeff Steele – Clark Hill PLC
Michael Boland – Clark Hill PLC
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Employers Are At Risk Without Solid
Contractual Protection
• Transient workforce/Employment “At Will”
• Prevalence of electronic and easily
transportable data
• Blackberries, PDAs and laptop computers
• Email, Zip drives, work at home
• Statutory and common law protections exist,
but they can be hard to sustain and don’t
protect as much as employers generally want
protected
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Big Picture Before Security:
Know Your Objectives
• Back up
• Take a high level overview of the goals and
objectives
• Do not get focused on singular solutions
• Be weary of the “I just need…”
• Rule 101 in Project Management:
– What are the Goals?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
What is the Big Picture:
Information Governance
• What is Information Governance?
– A holistic understanding of your organization's
data
– Big Data (marketing parlance)
• It means something different to every
organization
– Google
– Johnson & Johnson
– PG&E
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
What is the Big Picture:
Information Governance
Information Governance = Big Data
A holistic understanding of your organization's data
Compliance
Access
Value
Risk
Security
• What is in, and how many buckets there
are, is defined by your organization
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Information Governance: No Silos
Compliance
Access
Value
Risk
Security
• These necessarily cross-pollinate
• Solutions do not work in a vacuum
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Information Governance:
Another View
•
Taking another view
– http://www.edrm.net/resources/
guides/igrm
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Conceptualizing Data Volumes
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•
What is a Megabyte?
– 1,024 MB = 1 GB = 9,000 docs / 54,000 pages (21.6 bankers boxes)
– 1,024 GB = 1 TB = 50,000 trees (10 TB = Printed Library of Congress)
– 1,024 Terabyte (TB) – 1 Petabyte (PB) = 250 billion pages of text
– 1,024 Petabyte (PB) = 1 Exabyte (EB) = 1 trillion books
In 2002 there were 5 EB of data stored in computers world wide or all the
words ever spoken by mankind since the dawn of time
The amount of data in the world has grown from 5 EB in 2002 to 161 EB in
2006
– 12 stacks of books from the Earth to the sun
By 2010 it reached 988 EB (to Pluto and back)
In 2011 there was 2 Zetabyte (ZB): 2,048 EB
– which is as many bytes of information as there are stars in the universe
Cost of a GB of Storage
– 1956: $2,000,000 vs. 2013: $0.05
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
How Does an Organization
Create Change?
• Data is everyone’s issue, start with
changing the groupthink
• Collaborative Strategies
• Protecting and safeguarding your
organization's information will not be
accomplished in a silo
• Policy alone will not be effective
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Top Down Buy In
• Find/identify ambassadors within the
organization
• Create a high level plan
• Allow for flexibility
• Identify a small number of goals
• Understand that the goals will never be
accomplished completely
• Know what you are in for
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Top Down Buy In: Find Value
• Much of this exercise is commonly viewed as a
resource cost
• Find the value
– Look at smaller parts of the plan to identify
areas that bring value
– Don’t get bogged down by the enormity of the
whole project
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Top Down Buy In:
Small Bites at the Apple
• This is a long term plan
• It will take small wins and slow steps
• Rarely is there a one-size fits all solution or
technological innovation that will solve all of you
issues
• Be creative
– Not every issue requires a big long term
solution
– Identify these as you go
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Overview
• Identify and convince ambassadors and
champions within the organization
– Start becoming proactive rather than reactive
• Back up, map out your origination's model
– Allow for flexibility
• Start small and find value
– Understand that this is a never-ending fluid
process
– It is now the world we live in
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Statutory, Common Law and
Contractual Protections
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Trade secret acts
Economic Espionage Act
Fiduciary duty
Copyright laws
Patent laws
• Non-competition
agreements
• Non-solicitation
agreements
• Confidentiality
agreements
• Employee invention
agreements
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Practical Protections Protecting Your Information
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•
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Limit Access
Limit Use
Track Document Use
“Lock and Key” Rules
Mark Documents as Confidential or Trade
Secret
• Exit Interviews and Follow-up
• Enforce Rules and Agreements
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Trade Secrets - Statutory Protection
• Statues prohibiting trade secret misappropriation
– Michigan Uniform Trade Secret Act
– Uniform Trade Secret Act adopted by other states
– Federal Economic Espionage Act
• Protections available even without a written contract
….. but harder to prove a violation
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Trade Secrets – Statutory Definition
• Michigan Uniform Trade Secret Act, MCL
445.1902(d)
– “…information, including a formula, pattern, compilation,
program, device, method, technique, or process, that is both of
the following:
(i) Derives independent economic value, actual or potential,
from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use; and
(ii)Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.”
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Trade Secrets –
Factors Courts Consider
• The extent to which the information is known
outside the business
• The extent to which the information is known by
employees in the industry
• The measures taken to guard the secrecy of the
information
• The value of the information to the employer and
its competitors
• The amount of effort and money expended by the
employer in developing the information
• The ease or difficulty with which the information
could be duplicated by others
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Trade Secrets –
What is NOT a Trade Secret
• Examples include
– General skills or knowledge
– Information that can be obtained with
reasonable effort
– Publicly available information
– Information that is/was not subject of
reasonable efforts to maintain secrecy
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Trade Secrets – Tips
• Use reasonable, affirmative measures to protect the
information -- simply categorizing documents as trade
secret is probably insufficient
• Some examples:
– Check employee backgrounds
– Mark documents “confidential” or “trade secret”
– Discuss the issue with staff, and identify that which
you consider secret
– Segregate trade secrets
– Lock up trade secret documents after use
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Trade Secrets – Tips
• Some more examples:
– Computer security
– Sign-in/out logs
– Have employees sign confidentiality/non-disclosure
agreements
– Have employees sign non-competition agreements
– Send letters to new employees advising of the
employee’s obligations to your company
– Consider searching departing employees’ computers
– Implement legitimate document destruction/shredding
policies
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Confidentiality Agreements
• Confidential, but non “trade secret,”
materials are not generally protected by
statute and likely require a valid contract to
protect
• Some businesses might be required by
law to protect certain types of information,
and to have confidentiality agreements
covering same
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Confidentiality Agreements - Benefits
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Can protect more than just “trade secrets”
Provides notice
Can help identify protected information
Can limit litigation over what is protected
Can be easier to prove a breach
Can be easier to gain injunction to prohibit use or
continued use
• Easier for subsequent employers to understand
boundaries, and more likely to get a subsequent
employer’s attention
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Confidentiality Agreements Content Considerations
• Craft the agreement carefully
• Main Elements of a Confidentiality Agreement
– State that the employee is bound, regardless of how discharged
– Define what is confidential
• Don’t rely on “boilerplate,” try to identify specific information
• Consider what is truly confidential, avoid overreaching
– Consider excluding information that is not confidential, such as:
• Information legitimately in employees possession before
employment
• Information made public through legitimate means
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Confidentiality Agreements Content Considerations
• Detail your employees’ obligations
– when materials can be used
– how materials can be used
– how, and to whom, materials can be disseminated
– how documents should be maintained after use
• Time Period
– Outline how long documents remain confidential
– Consider a provision discussing when a document
might no longer be considered confidential
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Confidentiality Agreements –
Content Considerations
• Document Return Requirements
– Require employees to return confidential information when
• Employment ends
• Use is no longer necessary
• Employer requests
• Remedy Provision
– Injunctive relief
– Attorney fees
– Liquidated damages?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Confidentiality Agreements –
Practical Considerations
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•
•
•
Protect the information in practice
– Mark confidential documents “confidential”
– Segregate and lock up confidential documents, if possible
– Restrict access
– Restrict dissemination
– Require immediate return after use
Enforce
– Exit interviews
– Follow-up
– Prosecute violations
Do not publicly disclose confidential information
Obtain a confidentiality agreement from third parties to whom you give
confidential information
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Confidentiality Provisions Elsewhere
• Employee Handbooks
– Don’t rely on these, though
– “not a contract”
• Postings
• Training
• Marked Cabinets
• Get IT involved
– Security
– Notices
– Tracking
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Non-Competition and Non-Solicitation
Agreements
• Non-Competition Agreements
– Can be used to prohibit an employee from working for
competitors for a certain period of time
• Non-Solicitation Agreements
– Can be used to prohibit an employee from
• Contacting or soliciting certain customers/clients
for a period of time
• Recruiting or hiring your other employees
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Non-Competition and Non-Solicitation
Agreements: The Michigan Statute
• The Michigan Antitrust Reform Act, MCL 445.774(a)(1):
– “An employer may obtain from an employee an agreement or
covenant which protects an employer’s reasonable competitive
business interests and expressly prohibits an employee from
engaging in employment or a line of business after termination of
employment if the agreement or covenant is reasonable as to its
duration, geographical area, and type of employment or line of
business. To the extent such an agreement or covenant is found
to be unreasonable in any respect, a court may limit the
agreement to render it reasonable in light of the circumstances in
which it was made and specifically enforce the agreement as
limited.”
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Non-Competition and Non-Solicitation
Agreements: The Michigan Statute
• What does this mean?
– Non-competition agreements can be enforceable
– To be enforceable, the agreement must be
reasonable as to its:
• Duration
• Geographical area
• Scope (“type of employment and line of business”)
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Non-Competition and Non-Solicitation
Agreements: The Michigan Statute
• What else does this mean?
– A court has the power to evaluate whether the
agreement is reasonable in each respect
– If the court considers the restrictive covenant
unreasonable in any respect, it may “blue pencil” it to
make it reasonable and enforce it, as revised
– A court may “specifically enforce,” meaning it can
enjoin the employee from violating the agreement
So, do you overreach because a court can narrow?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Non-Competition and Non-Solicitation
Agreements: Other States
• Non-competition/non-solicitation law is a creature of state law
– Different states have different rules, and different interpretations
• Some states disfavor
• Some states prohibit “blue penciling”, meaning that the
agreement is either enforceable as written, or it is not
enforceable at all
• Other states require certain types of consideration
– California law, for example, is very restrictive
POINT: Employers operating in different states, or that wish to
enforce non-competition/non-solicitation agreements in different
states, need to be cognizant of the law of each jurisdiction
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Non-Competition and Non-Solicitation
Agreements: Content Considerations
• Think before you draft
– Have a good business justification, something more than a
desire to limit “mere competition”
• How will you be harmed if an employee leaves to go to a
competitor?
• How would it be unfair to your business if the employee
leaves to go immediately to work for a competitor?
– Are you willing to take action to enforce the agreement, even if it
means litigation?
– Are you willing to consistently enforce?
– Are you binding only the employees you need to bind, consistent
with your business justification?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Non-Competition and Non-Solicitation
Agreements: Practical Considerations
• Remind departing employees of their obligations
• Enforce violations
• Protect the rights of your competitors
– Consider asking prospective employees whether they
are bound by a non-competition agreement
– Prohibit employees from using, disclosing trade
secrets or confidential information belonging to others
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Exit Interview
• Remind departing employees of their legal and
contractual obligations
• Ask employees to confirm those obligations
• Find out where employees will be working
• Demand return of all confidential/trade secret
material
• Document exit procedure in the personnel file
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Avoiding Litigation
• Watch out for the rights of competitors and other businesses
– Consider confidentiality/non-competition issues when hiring,
such as:
• Asking prospective employees whether they are bound by a
non-competition agreement
• Putting language in employment applications regarding
contractual limitations and use of confidential information
• Creating acknowledgement forms where employees attest
that work for your company will not violate contractual
obligations
• Creating agreements that prohibit use and disclosure of
another businesses confidential or trade secret information
– Don’t use someone else’s confidential or trade secret information
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Employee Invention Agreements
• There is no general duty for employees to assign
invention rights to employers
• Employers can take ownership of certain employee
inventions through contract
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Employee Invention Agreements
• Include consideration
• State that the employer is the sole owner of defined
information, and that employee agrees to convey any
personal interest to the employer
• Outline what information is considered the property of the
employer
– What if developed during work hours?
– What if developed on employer’s equipment or computer?
• Outline who has royalty rights, copyright interests, and use
rights
• Include a provision for the employee to identify beforehand
what, if any, inventions they claim for themselves
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Jeffrey A. Steele
Michael J. Boland
313.965.8509
jsteele@clarkhill.com
312.985.5519
mboland@clarkhill.com
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org