This document discusses strategies for protecting trade secrets and confidential data when using cloud computing services. It begins with definitions of cloud computing and trade secrets. It then outlines some of the benefits of cloud computing for businesses. However, it also notes concerns about storing trade secrets on third-party shared systems. The rest of the document provides recommendations for how inside counsel can help companies address these concerns, including paying attention to cloud service terms of service, encrypting and compartmentalizing data, monitoring data transfers, training employees, and forming an internal response team to handle any security incidents.

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Investigating and Confronting the Threat
AIPLA 2015 Spring Meeting - Seth A. Northrop

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So, What’s The
CLOUD?

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1
Centralized sharing of
computing resources
across a network

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2 Either “public” or
“private”
(Not my house!)

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2 Either “public” or
“private”
(Much more accurate
for Silicon Valley)

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3 Different services
provided

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Why Business Is
LOOKING TO
THE CLOUD

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1This stuff is hard to
manage
(This was me!)

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2It provides business
with more flexibility
(Definitely not me!)

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3It saves money

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SIMPLE TRUTH
FOR INSIDE COUNSEL:
The Cloud Is Here To Stay.
NOW WHAT?

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What are
TRADE
SECRETS?

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1 The information needs
to be secret (shocker!)

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2
It derives “independent
economic value” from
being secret

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3 There are reasonable
efforts to keep it secret
Unif. Trade Secrets Act § 1.4

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4
Provides a right to limit
the dissemination of the
information
Altavion, Inc. v. Konica Minolta Sys. Lab. Inc., 226 Cal.App.4th 26
(Cal. App., 2014)

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Anyone else see the
concerns related to storing
secrets on third-party shared
systems?
(Storm metaphor was
inevitable)

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It Feels A Bit Like
BEING LOST
IN THE FOG

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How to
WEATHER
THE STORM

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It Begins And Ends With
Reasonableness
(Not every stock photo
can be unlame)
Taco Cabana Intern., Inc. v. Two Pesos, Inc., 932 F.2d 1113,
1124 (5th Cir.1991)

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Pay Attention To The
Terms of Service

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1Nobody looks this good
negotiating a contract

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2
Most lack the buying
clout to negotiate cloud
Terms of Service
(Even if you look like these
two!)

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3Own your data

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3Own your data

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4Control who views your
data
(He’s watching you now)
Lincoln Park Sav. Bank v. Binetti, 2011 U.S. Dist. LEXIS 7320
(N.D. Ill. Jan. 26, 2011)

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4Control who views your
data

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4Control who views your
data

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5
Look for assurances to
keep data confidential
and secure
Von Holdt v. A-1 Tool Corp., 2013 U.S. Dist. LEXIS 636 at *9-16
(N.D. Ill., Jan. 3, 2013)

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5
Look for assurances to
keep data confidential
and secure

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5
Look for assurances to
keep data confidential
and secure

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6
Watch for provisions
that allow data to be
moved

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6
Watch for provisions
that allow data to be
moved

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6
Watch for provisions
that allow data to be
moved

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Encrypt Your Data
(And beware of hackers
wearing hoodies)

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Silo Your Data
Lockheed Martin Corp. v. L-3 Commc’ns Corp., 2008 U.S. Dist.
LEXIS 109615 (N.D. Ga. Sept. 30, 2008)

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Shore Up Internal Data
Storage Policies

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Monitor Data Transfers
To The Cloud

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Train Your Employees
(Not that kind of training!)

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Train Your Employees
(How many of you are
sleeping like this guy?)

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Form A Quick Response
Team
(Maybe without guns?)Lockheed Martin Corp. v. L-3 Commc’ns Corp., 2008 U.S. Dist.
LEXIS 109615 (N.D. Ga. Sept. 30, 2008)

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Form A Quick Response
Team
(Better?)

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… and Include Outside
Counsel
(Too gratuitous?)In re Woolworth Corp. Sec. Class Action Litig., 1996 U.S. Dist.
LEXIS 7773, at *5–8 (S.D.N.Y. June 6, 1996)

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Seth A. Northrop
Silicon Valley
SNorthrop@robinskaplan.com
650.784.4012