Time and again, employees find themselves in litigation over their former employers' confidential information or trade secrets. New employers are also at risk of being brought in as parties to the lawsuits on tortious interference or similar claims. Most companies nowadays understand they can determine whether an employee has downloaded and transferred company information onto a portable electronic storage device or e-mailed information to a non-work e-mail account. In fact, many companies monitor such behavior as a matter of course or can easily retrieve it if they suspect something is amiss.

Employees should not keep any documents or electronic files containing their employer's confidential information or trade secrets upon leaving and should be aware that subsequent employment with a competitor will likely result in heightened scrutiny on the part of their former employer. For example, in a lawsuit filed on October 21, 2011, Groupon Inc. has accused two former sales managers of taking confidential trade secrets with them in order to aid Google's competing Google Offers service. So far, Google has not been named in the lawsuit. As an initial matter, Groupon is seeking a court order to prevent the former employees from disclosing and/or using customer lists and sales and marketing plans for Google's benefit. Whether discovery will ultimately support the allegations in the lawsuit remains to be seen, but you can bet these former managers' e-mail and computers will be thoroughly inspected.

Although a theft of trade secrets case is often expensive to prosecute because it generally involves extensive discovery on an expedited basis and hearings for a temporary restraining order and injunction long before a trial date has even been set, companies are often willing to do whatever it takes because of the critical information and competitive advantages at stake. The causes of action that will likely be asserted also provide for favorable remedies. Specifically, if the employee is subject to an employment agreement, Texas allows for the recovery of attorneys' fees in breach of contract actions. Further, in addition to the laundry list of claims that can be made (e.g., breach of the common law duty of loyalty, breach of fiduciary duty, misappropriation of trade secrets, unfair competition, and conversion), the Texas Theft Liability Act provides for attorneys' fees as well. Even more concerning is the companion Texas Penal Code provision that classifies theft of trade secrets as a third degree felony

Depending on the facts of the matter, the possibility of criminal liability is real. If the intent to convert a trade secret is related to or included in a product that is produced for or placed in interstate commerce, the federal theft of trade secrets statute is also in play. This statute allows for imprisonment of up to ten years and the imposition of hefty fines. For example, on October 11, 2011, a former employee of the hedge fund, Citadel, LLC, had a criminal complaint filed against him by the United States Attorney's Office in federal court in addition to a restraining order imposed on him by a civil court in Illinois six weeks earlier. The federal docket sheet shows he was arrested on October 12 and had bond set at $25,000.

In the federal criminal case, the United States has accused the former employee of taking Citadel's trade secrets related to its trading systems and attempting to hide the information. Specifically, the engineer is accused of illegally uploading trade secrets about Citadel's computer-driven trading strategies to personal devices before attempting to destroy the evidence. The former employee is alleged to have solicited friends to help him hide and destroy his storage devices, and according to the complaint, Citadel was able to recover some of the devices after engaging a diver to retrieve them from a canal where they had been dumped. Regardless of what the evidence ultimately shows, the former employee has to defend against not just claims seeking monetary damages but his freedom being taken away in an open and public forum.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.