Last month, a tech giant (IBM) sued one of its former executives who went to work for another tech giant (Microsoft), alleging that she breached her non-compete agreement and misappropriated trade secrets. Given the parties involved, you probably assume that the trade secrets at issue were source codes or algorithms. In fact, they were IBM’s diversity initiatives, strategies, and data.
In IBM v. McIntyre, IBM alleged that its former chief diversity officer, Lindsay-Rae McIntyre, misappropriated IBM’s trade secrets by accepting an offer to hold the same title at Microsoft. IBM’s chief concern with McIntyre’s new employment concerned her “first-hand knowledge of IBM’s confidential strategies, secret diversity representation data, proprietary technologies, and recruitment, retention, and promotions plans for diverse talent.” According to IBM, such information would inevitably help Microsoft to compete against IBM for the “same diverse talent” that McIntyre was responsible for recruiting, retaining, and developing at IBM. IBM sought injunctive relief against McIntyre to prevent her from working for Microsoft until the expiration of the twelve-month non-competition period in her agreement with IBM.
In response to IBM’s application for injunctive relief, McIntyre dismissed IBM’s concerns on the grounds that diversity work must be “specific and customized” to be effective at any company. According to McIntyre, her work at IBM was not “practically useful” to her at Microsoft, where her work would necessarily be focused on Microsoft’s corporate culture and internal goals, which are “entirely distinct” from IBM’s culture and goals.
The case settled before the hearing on IBM’s application for injunctive relief, so we have no judicial decision (or any other basis) upon which to assess the merits of the parties’ respective positions. Still, the case is notable as the first case we are aware of in which an employer sought to protect its diversity initiatives, strategies, and data as protectable trade secrets.
Thus, McIntyre raises the question: Do you want to try to protect your diversity strategies and related work product as trade secrets? Companies commonly tout their employees as their most valuable asset and diversity as an important organizational value. Thus, how you recruit diverse candidates and retain diverse employees might qualify as a legally protectable business interest similar to other strategic initiatives, such as the development of customer databases and marketing strategies. Protecting your diversity-related methods and materials might include, among other things, marking documents as proprietary and confidential, restricting access to documents and information about diversity strategies to personnel on a “need to know” basis, and requiring employees with access to confidential information to sign non-disclosure agreements.
We regularly advise our clients about the intellectual property components to managing the workplace and would be happy to talk with you about whether attempting to protect your diversity-related efforts as trade secrets makes sense for your organization.
Danielle Lawrence, Law Clerk, assisted with the preparation of this blog.