The “George Costanza Defense” to Trade-Secrets Theft

Costanza

Seinfeld fans will remember the episode where George Costanza’s boss caught him sleeping with a cleaning lady on his desk, leading to this memorable exchange:

Mr. Lippman: It’s come to my attention that you and the cleaning woman have engaged in sexual intercourse on the desk in your office. Is that correct?

George Costanza: Who said that?

Mr. Lippman: She did.

George Costanza: [pause] Was that wrong? Should I not have done that? I tell you, I gotta plead ignorance on this thing, because if anyone had said anything to me at all when I first started here that that sort of thing is frowned upon… you know, cause I’ve worked in a lot of offices, and I tell you, people do that all the time.

Mr. Lippman: You’re fired!

Funny stuff. Now, a former Ford employee is using a similar excuse to explain alleged trade-secrets theft.

According to this Detroit News article, the FBI is investigating a former Ford engineer who admitted planting listening devices in Ford’s meeting rooms. These devices recorded meetings, including ones not involving the engineer.

The engineer’s lawyer is quoted in the article. He essentially gives the Costanza defense, saying that his client used the devices to help her take notes. He’s pleading ignorance on his client’s behalf. She apparently did not know that it was improper to plant hidden recording devices in meeting rooms and leave them there to record meetings she did not attend.

We have no idea whether she is telling the truth. But just like George’s boss, the FBI seems skeptical.

There’s a lesson here. You need to let new employees know their obligations when it comes to protecting your confidential information. A written trade-secrets policy, as either a supplement to or part of an employee handbook, is a great start. The policy should prohibit recording meetings or other conversations without management’s approval.

Can Mark Cuban’s Cyber Dust Help Protect Proprietary Information?

Cyber Dust is an app that lets users send text messages without leaving a digital fingerprint. All texts “self destruct” within 30 seconds, after which they are not stored anywhere — including on Cyber Dust’s servers. Also, Cyber Dust notifies you if someone takes a screenshot of one of your Cyber Dust texts.

Mark Cuban is behind Cyber Dust. In a recent Forbes article, he explained that the idea came from his own experience of having the SEC use his text messages in its insider-trading action against him: “That the phone companies and your text recipients own your texts and even the most innocent text can take on a whole new context. I wanted to have a means of communication that is analogous to face to face – where you can speak openly and honestly. That is why we created Cyber Dust.”

Similar technology is being developed for emails. For example, The Atlantic recently wrote about Pluto Mail, which includes features that allow the sender to set an email to expire after a set time. After that, the recipient can no longer view the email.

As Cuban notes, emails and texts create a digital record that can last forever. When your employees (or others, like consultants or vendors) send emails and text messages that contain your proprietary information, there is a risk of disclosure. As more companies use bring-your-own-device policies, those companies lose even more control of information sent via text and email.

I’ve been thinking of how to use this technology to minimize unwanted disclosure. For example, a company could require that all work-related text messages be sent via Cyber Dust. Emails are a bit more complicated, since there is often a need to preserve emails for later use. But a company could require that all emails containing proprietary information, or attaching certain proprietary documents, be sent with a scheduled expiration date.

In the end,  these policies would only be effective if there’s a way to monitor compliance. Otherwise, it’s not worth the effort. Also, these policies likely would not deter someone who is sending the information with malicious intent, such as an employee who knows he will be leaving to work for a competitor. UPDATE: In fact, such a person could use this technology to cover his tracks.

But it’s worth exploring how to use new technology like Cyber Dust to help bolster efforts to protect proprietary information.

Steakhouse Trade Secrets at Peter Luger

Most businesses have some kind of trade secrets, but many don’t realize it. Even when running a seemingly simple business, companies need to be aware of how they are protecting their proprietary information. Recently, food blog Eater.com wrote about how New York’s venerable Peter Luger Steakhouse prepares its porterhouse. This article shows that trade secrets can show up in unexpected places, like a famous steakhouse’s basement.

The article starts with a quote:

“There are very few secrets in a steakhouse,” says third generation Peter Luger Steakhouse proprietor Jody Storch. “It’s really just about buying the best product that’s out there and simply preparing it.”

But later on, Storch reveals that Peter Luger’s porterhouse is at least a little proprietary:

If there is a “secret” to the Luger porterhouse, it’s in the dry-aging. In the basement of Peter Luger is a long dry-aging room, but Storch cannot reveal details like how cold the temperature is in there, or what the humidity level is, or how long the aging process takes.

Peter Luger’s dry-aging process could be a trade secret. But only if it reasonably protects the information. Based on this article, it certainly seems that Peter Luger is focused on preventing disclosure of its proprietary process. Hopefully, it only shares this information with those who need it to do their jobs, all of whom signed confidentiality agreements.

All businesses, even simple ones, should ask (1) what proprietary information do we have, and (2) how are we protecting it? The answers can be critical to preventing unwanted disclosure and mitigating the damage of any such disclosure.

And if you make it to Peter Luger, order a slice or two of the bacon.

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