BFV Perspectives, Noncompete & Trade Secrets, Sports Fans Guide 2 HR, | Dec 20, 2016

NCAA Wakeyleaks Scandal Reinforces Need to Protect Trade Secrets

The ACC has fined Virginia Tech and Louisville $250,000 after it was discovered that the schools received confidential game-plan information from terminated Wake Forest radio analyst Tommy Elrod prior to their games against Wake Forest in 2014 and 2016.  It has been reported that Elrod, who is also a former Wake Forest player and assistant coach, also provided game-plan information to Army.   The fines are the highest allowed by the ACC’s bylaws.

In response to the scandal, Louisville announced that it suspended its offensive coordinator Lonnie Galloway from the Citrus Bowl. Galloway talked with Elrod before the teams played each other this season on November 12.   Louisville won the game 44-12.

Virginia Tech said a former assistant coach had received the confidential information from Elrod before the team played Wake Forest in 2014.  Virginia Tech has tried to downplay the incident stating that it didn’t believe the information was shared with other assistants.  Virginia Tech lost the game 6-3 in double overtime.

The scandal, cleverly deemed Wakeyleaks, serves as a reminder to employers that their confidential information and trade secrets are at risk of disclosure.   In order to effectively combat the threat of misappropriation, employers should undertake an offensive-minded strategy.  This includes taking steps to identify, label and treat confidential information as secret.  Specifically, employers should do the following:

  • Conduct an internal audit and identify the company’s confidential and trade secret information.
  • Label/mark proprietary information as “Confidential.”
  • Encrypt and password protect confidential information and trade secrets.
  • Limit access to confidential information and trade secrets only to those employees who use or need access to the information.
  • Invest in software that will allow the company to monitor employee activity included the massive deletion or transfer of data.
  • Have all employees who have access to confidential and trade secret information sign non-disclosure agreements.
  • Consider having employees sign other restrictive covenant agreements such as non-compete covenants and non-solicitation of employees and customers covenants.
  • Draft confidentiality policies that clearly explain how employees should handle confidential information and identify what conduct is prohibited.
  • Train employees about the company’s policies regarding the protection of its confidential information and trade secrets.
  • Implement rules that restrict the distribution and physical removal of confidential information and trade secrets from company premises.
  • Use computers without USB ports and/or disable USB ports or drives on company computers.
  • Monitor employee emails and handling of information during employment.
  • Forensically examine a departing employee’s laptop, desktop computers and electronic devices.
  • Immediately terminate a departing employee’s access to company information.
  • Develop exit interview procedures designed to protect against misappropriation including but not limited to, ensuring employees return all company information and disclose whether the employee has taken any information in anticipation of leaving.

The Wake Forest situation shows the importance of limiting confidential information to individuals on a need- to-know basis.  Elrod had access to all of the teams’ practices and press conferences, traveled with the team, and was allowed to come in during the week and watch film of the opponent with the coaching staff.

As the Wakeyleaks story unfolds, additional facts will likely surface that may provide additional lessons for employers.  In the meantime, by taking the above-steps employers will be better equipped to thwart efforts to misappropriate their information.

BFV Perspectives, Noncompete & Trade Secrets, Sports Fans Guide 2 HR, | Dec 20, 2016
Kenneth N. Winkler
Kenneth N. Winkler

Kenneth Winklera shareholder at Berman Fink Van Horn, helps employers navigate the employment laws and regulations that govern the workplace.