By mark
•
January 27, 2025
We are all aware that state and federal regulations require the secure destruction of personal information. What many don’t appreciate, however, is that there are also important legal considerations supporting the need for the secure destruction of competitive information. 1) Casually Discarded Information is Not Protected It was none other than the U.S. Supreme Court that ruled that casual disposal results in the loss of all rights and expectations of privacy and ownership. In the precedent setting case, California v. Greenwood (1988), the state was attempting to uphold the conviction of a drug dealer, where probable cause for his arrest was based on evidence police found in his trash. Though Greenwood was originally convicted, an appeals court overturned the verdict, saying the man’s right to privacy had been violated when police confiscated his trash. The U.S. Supreme Court disagreed with the appeals court, instead saying that Greenwood (or anyone else) has no right or expectation of privacy when something is discarded in an unprotected manner. Since then, Greenwood v. California has been cited in a wide array of related cases, the most recent being People v. Dorado (2024), where the California Court of Appeal, Fourth District, again upheld the principle that there is no legal right or expectation of privacy when media is discarded in an unsecure manner. 2) Improper Disposal of Information Nullifies Intellectual Property Claims For decades, courts have upheld the legal principle that the failure to safeguard proprietary information can nullify intellectual property claims. Whether through premature public disclosure or casual disposal, these precedents highlight the importance of protecting intellectual property. The precedent is DuPont v. Christopher (1970), where the defendant was sued by DuPont for illegally obtaining its plans for a new manufacturing process. DuPont prevailed specifically because it could demonstrate that it had gone to significant lengths to protect the information. The ruling inferred for the first time that had DuPont not demonstrated those security measures, they would have lost their claim of ownership. Over time, a number of cases have reinforced this precedent, including Relational Database Systems, Inc. v. FileNet Corporation (1991), Magnesystems, Inc. v. Nikken, Inc. (1996), Hayes Microcomputer Products, Inc. Patent Litigation (1992) and, Mattel, Inc. v. MGA Entertainment, Inc. (2008). 3) Even Casual Business-related Notes are Considered “Official Records” There have been any number of cases where, informal documents—like handwritten notes, internal emails, or even customer letters—have been admitted in court as business records. Take, for instance, the well-known case where a cocktail napkin was treated as binding evidence in a legal dispute in the Kolniak v. Bridger Logistics case. In 2012, Jonathan Kolniak alleged that he was offered an employment agreement by James Ballengee, an executive at Bridger Logistics, which was written on a cocktail napkin during a meeting. When Bridger Logistics was sold for $820 million in 2015, Kolniak claimed he never received the equity promised. Although the case was settled before trial, the incident highlights how informal agreements, even when scribbled on napkins, can be considered a valid business record. In fact, courts have long relied on the premise that the threshold for treating a document as an official business record is relatively low. This is why it is important that even the most innocuous documentation like phone memos and hand-written notes – or, in some cases, cocktail napkins, should be properly destroyed. These Concerns are Not Just for Big Companies It is a common mistake to think of intellectual property protection is an issue only affecting large corporations. The fact is that small- and medium-sized enterprises (SMEs) have lots of trade secrets, including pricing, customer lists, and proprietary systems, and are equally or even more vulnerable. If an SME cannot demonstrate it is properly protecting their information, it risks losing its ability to enforce non-competition and non-disclosure agreements (NDAs). Unlike a large corporation that may be able to survive such an event, the inability to defend non-competes or NDAs can severely compromise or even mean the end of a smaller business. This is just one more reason why secure destruction should be the default for all discarded paper and electronic records. Allowing for two options not only opens the door to improper disposal, but it also undermines the ability to emphatically establish that the organization took strong measures to defend its trade information. Contact Pacific Northwest Shredding today to learn how we can help. © 2024 Pacific Northwest Shredding - All rights reserved.