Trade Secrets in the Cloud: Stormy Weather?


This is the first in a series of posts addressing trade secrets in the age of cloud computing.

As companies increasingly turn to the cloud to store content, I’ve been considering the implications for trade-secret protections. Mostly, I have been thinking about how companies should restrict sharing of data and documents through services such as Dropbox. I will be addressing these issues in future posts.

But an article I read recently on titled Is your cloud drive really private? Not according to the fine print made me think of something entirely different: once in the cloud, companies are at the mercy of the cloud provider’s terms of service.

According to this article, several cloud providers’ terms of service allow them to actively search stored files. This includes Apple, Microsoft, and Verizon Online. While the article discusses terms of service in the context of ┬álocating and preventing child pornography (which is obviously a critical effort), I wonder how these terms of service affect a company that stores confidential documents in the cloud.

To be classified as a trade secret under the Uniform Trade Secrets Act, reasonable efforts must be taken to protect the information. Is it reasonable to store a trade secret on a cloud server when the provider can actively search the stored documents?

I am not aware of any court decisions addressing this issue. But, as long as the cloud provider cannot share these documents with anyone else (unless a crime is being committed), it seems to me that the mere fact that the cloud provider itself can access documents should not make the use of cloud services to store trade secrets unreasonable. Companies have to be able to contract with third parties to provide routine services without threatening trade-secret protections.

Certainly, before selecting a cloud-storage provider, it is important to understand the provider’s terms of service.

As technology evolves and moves forward at warp speed, new and unique issues relating to trade secrets are sure to emerge. I’m going to try to keep up with these issues on this blog.

One response

  1. Pingback: Trade Secrets In the Cloud: When Can Cloud Providers Access and Share Your Information? | Trade Secrets Law

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