1. MISHRM 2014 Annual Conference HR Amplified: Driven to be…

2. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org PROTECTING THE COMPANY IMAGE AND ASSETS Jeff Steele – Clark Hill PLC Michael Boland – Clark Hill PLC

3. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Employers Are At Risk Without Solid Contractual Protection Transient workforce/Employment “At Will” Prevalence of electronic and easily transportable data Blackberries, PDAs and laptop computers Email, Zip drives, work at home Statutory and common law protections exist, but they can be hard to sustain and don’t protect as much as employers generally want protected

4. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Big Picture Before Security: Know Your Objectives Back up Take a high level overview of the goals and objectives Do not get focused on singular solutions Be weary of the “I just need…” Rule 101 in Project Management: –What are the Goals?

5. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org What is the Big Picture: Information Governance What is Information Governance? –A holistic understanding of your organization's data –Big Data (marketing parlance) It means something different to every organization –Google –Johnson & Johnson –PG&E

6. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org What is the Big Picture: Information Governance What is in, and how many buckets there are, is defined by your organization Information Governance = Big Data A holistic understanding of your organization's data Information Governance = Big Data A holistic understanding of your organization's data Compliance Access Value Risk Security

7. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Information Governance: No Silos These necessarily cross-pollinate Solutions do not work in a vacuum Compliance Access Value Risk Security

8. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Information Governance: Another View Taking another view –http://www.edrm.net/resources/ guides/igrm

9. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Conceptualizing Data Volumes What is a Megabyte? –1,024 MB = 1 GB = 9,000 docs / 54,000 pages (21.6 bankers boxes) –1,024 GB = 1 TB = 50,000 trees (10 TB = Printed Library of Congress) –1,024 Terabyte (TB) – 1 Petabyte (PB) = 250 billion pages of text –1,024 Petabyte (PB) = 1 Exabyte (EB) = 1 trillion books In 2002 there were 5 EB of data stored in computers world wide or all the words ever spoken by mankind since the dawn of time The amount of data in the world has grown from 5 EB in 2002 to 161 EB in 2006 –12 stacks of books from the Earth to the sun By 2010 it reached 988 EB (to Pluto and back) In 2011 there was 2 Zetabyte (ZB): 2,048 EB –which is as many bytes of information as there are stars in the universe Cost of a GB of Storage –1956: $2,000,000 vs. 2013: $0.05

10. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org How Does an Organization Create Change? Data is everyone’s issue, start with changing the groupthink Collaborative Strategies Protecting and safeguarding your organization's information will not be accomplished in a silo Policy alone will not be effective

11. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Top Down Buy In Find/identify ambassadors within the organization Create a high level plan Allow for flexibility Identify a small number of goals Understand that the goals will never be accomplished completely Know what you are in for

12. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Top Down Buy In: Find Value Much of this exercise is commonly viewed as a resource cost Find the value –Look at smaller parts of the plan to identify areas that bring value –Don’t get bogged down by the enormity of the whole project

13. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Top Down Buy In: Small Bites at the Apple This is a long term plan It will take small wins and slow steps Rarely is there a one-size fits all solution or technological innovation that will solve all of you issues Be creative –Not every issue requires a big long term solution –Identify these as you go

14. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Overview Identify and convince ambassadors and champions within the organization –Start becoming proactive rather than reactive Back up, map out your origination's model –Allow for flexibility Start small and find value –Understand that this is a never-ending fluid process –It is now the world we live in

15. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Statutory, Common Law and Contractual Protections Trade secret acts Economic Espionage Act Fiduciary duty Copyright laws Patent laws Non-competition agreements Non-solicitation agreements Confidentiality agreements Employee invention agreements

16. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Practical Protections - Protecting Your Information Limit Access Limit Use Track Document Use “Lock and Key” Rules Mark Documents as Confidential or Trade Secret Exit Interviews and Follow-up Enforce Rules and Agreements

17. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Trade Secrets - Statutory Protection Statues prohibiting trade secret misappropriation –Michigan Uniform Trade Secret Act –Uniform Trade Secret Act adopted by other states –Federal Economic Espionage Act Protections available even without a written contract ….. but harder to prove a violation

18. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Trade Secrets – Statutory Definition Michigan Uniform Trade Secret Act, MCL 445.1902(d) –“…information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following: (i)Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii)Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

19. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Trade Secrets – Factors Courts Consider The extent to which the information is known outside the business The extent to which the information is known by employees in the industry The measures taken to guard the secrecy of the information The value of the information to the employer and its competitors The amount of effort and money expended by the employer in developing the information The ease or difficulty with which the information could be duplicated by others

20. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Trade Secrets – What is NOT a Trade Secret Examples include –General skills or knowledge –Information that can be obtained with reasonable effort –Publicly available information –Information that is/was not subject of reasonable efforts to maintain secrecy

21. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Trade Secrets – Tips Use reasonable, affirmative measures to protect the information -- simply categorizing documents as trade secret is probably insufficient Some examples: –Check employee backgrounds –Mark documents “confidential” or “trade secret” –Discuss the issue with staff, and identify that which you consider secret –Segregate trade secrets –Lock up trade secret documents after use

22. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Trade Secrets – Tips Some more examples: –Computer security –Sign-in/out logs –Have employees sign confidentiality/non-disclosure agreements –Have employees sign non-competition agreements –Send letters to new employees advising of the employee’s obligations to your company –Consider searching departing employees’ computers –Implement legitimate document destruction/shredding policies

23. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Confidentiality Agreements Confidential, but non “trade secret,” materials are not generally protected by statute and likely require a valid contract to protect Some businesses might be required by law to protect certain types of information, and to have confidentiality agreements covering same

24. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Confidentiality Agreements - Benefits Can protect more than just “trade secrets” Provides notice Can help identify protected information Can limit litigation over what is protected Can be easier to prove a breach Can be easier to gain injunction to prohibit use or continued use Easier for subsequent employers to understand boundaries, and more likely to get a subsequent employer’s attention

25. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Confidentiality Agreements - Content Considerations Craft the agreement carefully Main Elements of a Confidentiality Agreement –State that the employee is bound, regardless of how discharged –Define what is confidential Don’t rely on “boilerplate,” try to identify specific information Consider what is truly confidential, avoid overreaching –Consider excluding information that is not confidential, such as: Information legitimately in employees possession before employment Information made public through legitimate means

26. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Confidentiality Agreements - Content Considerations Detail your employees’ obligations –when materials can be used –how materials can be used –how, and to whom, materials can be disseminated –how documents should be maintained after use Time Period –Outline how long documents remain confidential –Consider a provision discussing when a document might no longer be considered confidential

27. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Confidentiality Agreements – Content Considerations Document Return Requirements –Require employees to return confidential information when Employment ends Use is no longer necessary Employer requests Remedy Provision –Injunctive relief –Attorney fees –Liquidated damages?

28. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Confidentiality Agreements – Practical Considerations Protect the information in practice –Mark confidential documents “confidential” –Segregate and lock up confidential documents, if possible –Restrict access –Restrict dissemination –Require immediate return after use Enforce –Exit interviews –Follow-up –Prosecute violations Do not publicly disclose confidential information Obtain a confidentiality agreement from third parties to whom you give confidential information

29. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Confidentiality Provisions Elsewhere Employee Handbooks –Don’t rely on these, though –“not a contract” Postings Training Marked Cabinets Get IT involved –Security –Notices –Tracking

30. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Non-Competition and Non-Solicitation Agreements Non-Competition Agreements –Can be used to prohibit an employee from working for competitors for a certain period of time Non-Solicitation Agreements –Can be used to prohibit an employee from Contacting or soliciting certain customers/clients for a period of time Recruiting or hiring your other employees

31. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Non-Competition and Non-Solicitation Agreements: The Michigan Statute The Michigan Antitrust Reform Act, MCL 445.774(a)(1): –“An employer may obtain from an employee an agreement or covenant which protects an employer’s reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and type of employment or line of business. To the extent such an agreement or covenant is found to be unreasonable in any respect, a court may limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforce the agreement as limited.”

32. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Non-Competition and Non-Solicitation Agreements: The Michigan Statute What does this mean? –Non-competition agreements can be enforceable –To be enforceable, the agreement must be reasonable as to its: Duration Geographical area Scope (“type of employment and line of business”)

33. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Non-Competition and Non-Solicitation Agreements: The Michigan Statute What else does this mean? –A court has the power to evaluate whether the agreement is reasonable in each respect –If the court considers the restrictive covenant unreasonable in any respect, it may “blue pencil” it to make it reasonable and enforce it, as revised –A court may “specifically enforce,” meaning it can enjoin the employee from violating the agreement So, do you overreach because a court can narrow?

34. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Non-Competition and Non-Solicitation Agreements: Other States Non-competition/non-solicitation law is a creature of state law –Different states have different rules, and different interpretations Some states disfavor Some states prohibit “blue penciling”, meaning that the agreement is either enforceable as written, or it is not enforceable at all Other states require certain types of consideration –California law, for example, is very restrictive POINT: Employers operating in different states, or that wish to enforce non-competition/non-solicitation agreements in different states, need to be cognizant of the law of each jurisdiction

35. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Non-Competition and Non-Solicitation Agreements: Content Considerations Think before you draft –Have a good business justification, something more than a desire to limit “mere competition” How will you be harmed if an employee leaves to go to a competitor? How would it be unfair to your business if the employee leaves to go immediately to work for a competitor? –Are you willing to take action to enforce the agreement, even if it means litigation? –Are you willing to consistently enforce? –Are you binding only the employees you need to bind, consistent with your business justification?

36. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Non-Competition and Non-Solicitation Agreements: Practical Considerations Remind departing employees of their obligations Enforce violations Protect the rights of your competitors –Consider asking prospective employees whether they are bound by a non-competition agreement –Prohibit employees from using, disclosing trade secrets or confidential information belonging to others

37. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Exit Interview Remind departing employees of their legal and contractual obligations Ask employees to confirm those obligations Find out where employees will be working Demand return of all confidential/trade secret material Document exit procedure in the personnel file

38. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Avoiding Litigation Watch out for the rights of competitors and other businesses –Consider confidentiality/non-competition issues when hiring, such as: Asking prospective employees whether they are bound by a non-competition agreement Putting language in employment applications regarding contractual limitations and use of confidential information Creating acknowledgement forms where employees attest that work for your company will not violate contractual obligations Creating agreements that prohibit use and disclosure of another businesses confidential or trade secret information –Don’t use someone else’s confidential or trade secret information

39. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Employee Invention Agreements There is no general duty for employees to assign invention rights to employers Employers can take ownership of certain employee inventions through contract

40. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Employee Invention Agreements Include consideration State that the employer is the sole owner of defined information, and that employee agrees to convey any personal interest to the employer Outline what information is considered the property of the employer –What if developed during work hours? –What if developed on employer’s equipment or computer? Outline who has royalty rights, copyright interests, and use rights Include a provision for the employee to identify beforehand what, if any, inventions they claim for themselves

41. MISHRM P.O. Box 99463 Troy, Michigan 48099 (844) 4-MISHRM http://mishrm.org Jeffrey A. Steele 313.965.8509 jsteele@clarkhill.com Michael J. Boland 312.985.5519 mboland@clarkhill.com