“There’s Gold in Them Thar Hills”

A Hooter

The lawsuit involving Hooters and Twin Peaks has already triggered a wave of clever, and not so clever, headlines, but it is really no laughing matter. (With this post, I suppose that I just added a headline to the list. You be the judge as to which category it falls into.)

The dispute involves Joe Hummel, the former  EVP of operations at Hooters. Hooters alleges that as he was leaving the company, Hummel stole over 500 pages of sensitive business information and trade secrets.

He is now employed with La Cima restaurants. Unfortunately for Hooters, La Cima is in the process of launching the Twin Peaks restaurant chain (any guesses what the new chain will “feature”?). Before joining La Cima, Hummel allegedly downloaded Hooter’s marketing plans, contract agreements, recruiting tools, and sales figures – some or all of which are likely trade secrets – and then emailed them to himself using his personal email account. If this is true, how could it have been prevented? I regularly help companies prevent IP theft, and I can tell you that there is no easy fix. Instead, it requires a multi-pronged approach using the right mix of people, processes, and technology.

What is a trade secret anyway? The short answer is whatever you say it is! The more detailed answer is that a trade secret must be secret (not widely known), be of value because it is not widely known, and treated as a secret at all times. In this case, it is not entirely clear if all of the information that Hummel allegedly took would meet the definition, but at face value, certain elements would appear to fit the bill. I would strongly suspect that Hooter’s marketing plans were not widely available within the company or the industry as a whole. Would the marketing plan be of value because it is not widely available? Ultimately, that is for the courts to decide.

Asking the courts to pursue employees that steal trade secrets is certainly within your company’s rights, but I would liken it to putting toothpaste back in the tube once squeezed. It is time consuming and potentially very messy, and the end result may not justify the effort.

Does your company have any trade secrets? (Hint: the vast majority do.) What have you done to protect them? Could an outgoing executive steal your company’s trade secrets? Would you even know?

If the answer to any of the questions above causes concern or leaves you wondering about how well protected your trade secrets may be, we can help. Just don’t wait until a theft occurs. By that time, the toothpaste is out of the tube…

Hooters is not alone in dealing with this type of situation. Given the glamorous nature of their business, they are unlucky enough to attract media attention when things go wrong. That said, could your company be next?

Need a writer that understands fraud? When you hire me to write an article, blog post, newsletter, or white paper, you get an accomplished writer that is also an expert in fraud.

paul@mccormackwrites.com

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About Paul McCormack
I have over 20 years of experience in corporate fraud and intellectual theft prevention, detection and investigation. Unlike many fraud experts, I have both industry and professional services experience. To date, I have conducted over 800 interrogations of fraud suspects including numerous senior corporate executives. As a freelance writer, I have written over 1,000 articles on a broad range of topics. My areas of expertise include: • Asset Misappropriation • Big Data • Bribery, Corruption, and Collusion • Check, Wire, ACH, and Credit Card Fraud • Consumer Fraud • Corporate Security • Cybersecurity • Data privacy (Europe, Brazil, Russia, India, and China) • Drug Trafficking • Embezzlement • Employee Fraud • Executive Protection • Fintech • Financial Statement Fraud • FCPA • Healthcare fraud • Identity Theft • Intellectual Property Theft • Internal Audit • Interrogation Tactics • Loss Prevention • Mobile Fraud • Money Laundering • Operational Excellence • Organized Crime • Payments Fraud • PCI Compliance • Retail Fraud • Risk Management • Terrorism and Counterterrorism • UK Bribery Act • Workplace Violence

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