How to Avoid Getting Sued by a Former Employer

If you are recruited to work for a business that competes with your current employer, you could find yourself slapped with a big fat lawsuit over intellectual property theft, even if you did nothing wrong. Here's how to prevent that nightmare.

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When the economy goes south, companies get desperate for business. Many resort to layoffs to boost their bottom lines. Some companies, like Fannie Mae, go so far as to cook their books. Yet others opt to steal their competitor's intellectual property to gain a competitive advantage, says Michael Kump, a partner who specializes in intellectual property, antitrust and trade practices law at Kinsella Weitzman Iser Kump & Aldisert.

"The lifeblood of most businesses is information: customer information, product information. That's why intellectual property is so highly valued," says Kump. "As economic conditions tighten and people start looking for ways to cut corners and gain an advantage, some will cross the line and do so in an illegal manner."

Specifically, says the attorney, companies may try to recruit valued employees from successful competitors in order to obtain insider information.

Such underhanded business practices-both the recruiting to obtain trade secrets and the knee-jerk litigation-pose a threat to IT workers, whose specialized knowledge and skills remain in demand even during this economic downturn. IT professionals need to be careful about taking jobs with competitors because their former employers could try to sue them for "misappropriating trade secrets," even if they did nothing of the sort, says Kump. He expects such litigation to increase as the economic downturn continues.

This is not to say that IT professionals should avoid taking jobs with competitors (unless, of course, they've signed a non-compete agreement with their existing employer). They just need to be aware that the potential exists, and they must take measures to protect themselves.

Kump spoke with CIO about the rise in intellectual property litigation and ways employees can avoid it.

Why do you expect an increase in intellectual property-related litigation?

The lifeblood of most businesses is information: customer information, product information. That's why intellectual property is so highly valued. Whether you're a dry cleaning business with a customer list or a biotech company in Silicon Valley, the information you have is the lifeblood of what you do.

As economic conditions tighten and people start looking for ways to cut corners and gain an advantage, some will cross the line and do so in an illegal manner. One of the classic shortcuts is to steal competitors' intellectual property. It can be quicker to target key employees at a successful competitor and try to get those employees to come over to your side than to invest in process and grow your business the right way.

There's almost an unstated understanding that those employees you hire from competitors will bring intellectual property with them. That will lead to an increase in litigation. The type of claim I would expect to see is unfair competition, intentional interference and misappropriation of trade secrets.