United States: Can Silicon Valley Keep A (Trade) Secret?

Last Updated: February 28 2018
Article by Michael R. Greco

The simplest, most valuable, yet commonly overlooked piece of advice any trade secret owner can receive is this: Protect yours trade secrets!  It seems crazy that this simple advice warrants repeating, but apparently, it does, particularly in Silicon Valley where billions of dollars have been spent researching and developing electric and autonomous vehicle technology.

EV and AV technology is undergoing a rapid transformation.  AV manufacturers are preparing to test self-driving cars on our streets in the next few years.  Important to this discussion, billions upon billions of dollars are being spent to win the race.  If you're going to spend that type of money, it might be worth setting aside a few dollars to make sure your treasured work is yours and only yours when you cross the finish line.

Who isn't taking this approach you might ask?  Some might cite Waymo and Faraday & Future as examples.  If you are reading this article, you probably know about the Waymo v. Uber saga that recently ended with a $245 million settlement, not counting the millions of dollars spent on attorneys and other expenses, plus soft costs like lost productivity.  But a brief summary is helpful.

Alphabet's self-driving unit, Waymo, sued Uber alleging that it used stolen trade secrets.  Did Uber steal the trade secrets by hacking into Waymo's servers?  Nope.  It all began with a former Waymo employee who allegedly downloaded 14,000 files before quitting to launch his own start-up, which Uber subsequently purchased for $680 million!!

What happened with Faraday & Future?  You can probably guess.  After FF invested over $1 billion in developing the next generation of artificial intelligence electric vehicle technologies, it alleges that two senior, C-level executives recruited a group of FF employees to join them at their new and competing company, EVelozcity.  According to FF, before leaving, multiple employees copied and "took potentially thousands of FF's most sensitive electronic documents from" FF computers and servers.

Starting to see a trend here? 

Before addressing how this conduct can be prevented, let's spend a moment asking the question that must be on everyone's mind – why was it possible for these wayward employees to download such volumes of data on their way out the door?     

According to FF, "[t]he host of trade secrets that FF has developed since 2014 would be highly valuable to any competitor in the electric vehicle space."  Really?  Then act like it. 

Consider the Nicolas Cage movie, National Treasure.  While anything is possible is possible in Hollywood, the odds that someone could successfully steal the Declaration of Independence are between slim and none.  Why?  Because we treat the DOI like the treasure that it is, and we take more than reasonable precautions to prevent its theft.  The DOI is kept in a titanium case with bulletproof glass and is surrounded not only by inert gases, but also armed guards, countless cameras and a computerized security system. Every night, it is secured in an underground vault, and I'm willing to bet, only certain people with necessary clearance are allowed to access it.  In short, we view it as a treasure, and we treat it as such.  So too must we handle our trade secrets.

It is stunning to think that employees at Waymo and Farady & Future can plug in a portable storage device and make off with "valuable trade secrets."  Yet, it appears that they can; and a handful of lawyers have profited handsomely as a result.  So, heeding Ben Franklin's famous admonition, let's think about a few ounces of prevention that might be worth several hundred pounds of cure.  In other words, how might these types of mishaps be prevented in the future?  Here are a few suggestions:

  1. Set up sufficient IT controls. Work with your IT department or outside consultants to prevent or minimize the possibility of your trade secrets being downloaded onto a portable storage device ("PSD") or the cloud.  If an employee plugs in PSD or attempts to upload data to the cloud, your system should be set up such that it won't work, and IT should receive a red flag.  If for some legitimate business reason, this is not feasible, at the very least, IT should receive notification when an employee accesses thousands, hundreds or dozens of files in rapid succession (an action consistent with bulk downloading).
  2. Provide access to confidential information on a need to know basis only, and segregate information in silos when possible. Not every employee needs to have access to every file or category of information.  Limit their access to that information which they need in order to perform their duties; and to the extent possible, structure their duties so that they only know a piece of the puzzle.  This way, if they leave with information, its utility is limited. 
  3. Enact written policies, train your employees and let them know you're watching. Employees who handle confidential information should be required to handle it with the care and protection it deserves.  They should receive training about when, where and how it is ok to handle and use confidential information, and they should know that they must follow these protocols because their employer is watching. 
  4. Use strong, well-written agreements, especially if you are in California. Think about the risks presented if any employee were to take, use or disclose your confidential information, and make them promise in writing not to do so.  But don't just use a form agreement or borrow language from the latest business-to-business NDA your company utilized.  Employee agreements require careful attention.  This is particularly true in California, where the use of post-employment restrictive covenants is severely limited.  You may not be able to use a non-competition agreement in California, but well-written confidentiality agreements can go a long way; and believe it or not, there are many poorly written confidentiality agreements floating around the Golden State.
  5. Conduct trade secretaudits. Conducting a trade secret audit is not a small task; but it pales in comparison (both monetarily speaking and in terms of disruption) to the litigation that arises when trade secrets are taken and used to your competitive detriment.  A comprehensive audit requires a company to sit down with counsel, internal business stakeholders and IT personnel, and to some extent, external consultants in an effort to accomplish a variety of tasks.  Through a proactive and systematic approach, companies must identify their trade secrets, determine who has access, how trade secrets are used, what risks are present, and how these risks can be eliminated or minimized.  Potential solutions include improving and implementing written processes, training employees, preparing and rolling out effective written agreements, utilizing sufficient physical and electronic security measures, and more.  Given that numerous sources estimate billions of dollars of trade secrets are stolen every year, and billions more are spent developing new secrets, businesses must spend the time and money necessary to secure those secrets.  It's not a trivial expense, but it's a necessary one.
  6. Exit interviews and other protocols. Trade secret theft can happen at any time, but certain events are more often accompanied by theft than others.  Employee departures present such an example.  Take the time to interview your departing employees and perhaps their colleagues when employees decide to move on to perceptively greener pastures.  Review their recent electronic footprints and determine whether unusual electronic behavior was present.
  7. Regularly consult your legal counsel. For the same reason you should visit your dentist for routine cleanings, make sure your outside counsel is a part of your trade secret protection plans.  Don't wait until an emergency arises.  The unfortunate reality in today's world is that the expense of litigation can far exceed the amount of money it costs to prevent the litigation in the first place; and if litigation ever comes to pass, you will be far better situated if you have planned for that eventuality in advance.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Michael R. Greco
Similar Articles
Relevancy Powered by MondaqAI
Seyfarth Shaw LLP
Berman Fink Van Horn P.C.
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Seyfarth Shaw LLP
Berman Fink Van Horn P.C.
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions