Trade Secrets Protection: Snapchat Employee Leaks--Potential Damage Chronically Misunderstood (IPPIBlog.com)

A recent article published in a U.S. publication (The Daily Beast) titled “Cult-Like Language”; Snapchat Threatens Crackdown, Jailtime for Leakers”,[1] was a stark reminder to me of how little some employees understand about the sometimes severe consequences trade secrets infringement has on businesses, its employees, innovation, and the economy.

It was a stark reminder to me of what a long road brand owners, and we—in the IP protection profession—have ahead of us in communicating this current reality.

BRIEF BACKGROUND: SNAPCHAT

Snapchat is a U.S. founded company that provides a platform for video and photo imaging and messaging. It reportedly has over 166 million users. And just to give you an idea of the size and success of the company, it turned down a 3 billion dollar buyout offer from Facebook in 2014. So, clearly, Snapchat has much to protect—and should protect.

SYNOPSIS OF NEWS REPORTS

*This blog post is not intended to dispute the accuracy of the news reports, but to consider its reported discoveries

January 9, 2018 – The Daily Beast publishes a report titled, “This is Data Snaptchat Doesn’t Want you to See.” The article details the results of said publication’s review of confidential Snaptchat DAU metrics information (a.k.a. Trade Secrets.)

January 19, 2018 – The Daily Beast publishes the previously referenced article titled “Cult-Like Language”; Snapchat Threatens Crackdown, Jailtime for Leakers.”

The Daily Beast received a copy of an internal memo written by the “Snapchat” general counsel apparently intended for Snapchat personnel, which details the following:

“If you leak Snap Inc. information, you will lose your job and we will pursue any and all legal remedies against you.”

“And that’s just the start. You can face personal financial liability even if you yourself did not benefit from the leaked information. The government, our investors, and other third parties can also seek their own remedies against you for what you disclosed. The government can even put you in jail.”

EMPLOYEE PERSPECTIVE

Here is a sampling of reported quotes by former or current employees:

“Snap was known for using scare tactics pretty much all the time…Anytime there was a leak, [Snap CEO Evan [Spiegel] would send out a whole email to the company explaining how disappointed he was. It was like a cult-language, like ‘We’re so disappointed that someone ruined this for everyone.”
“Snapchat is notoriously secretive about its internal operations
“…the company goes through extensive measures to ensure that employees don’t reveal information to the outside world…”
“…restricting guests at its offices
“…even blocking the use of its own app.”
“Evan is paranoid and they go ballistic when there’s a leak.”
And according to the January 9th Daily Beast report, at Snapchat’s New Year’s Eve party, “…guests were forced to have the cameras of their phone taped over before entering.”

BRAND OWNER PERSPECTIVE

Now, here is a quote from a Bloomberg Businessweek article published in 2012 titled, “China Corporate Espionage Boom Knocks Wind Out of U.S. Companies,” that I think some Snapchat employees should read. It illustrates what businesses are up against in this day-and-age:

“The theft of American IP is about much more than the aggregation of big numbers. It is also the collection of individual, sometimes devastating, stories of loss.

For instance, when the American Superconductor Corporation had its wind-energy software code stolen by a major customer in China, it lost not only that customer, but also 90% of its stock value.”[2]

IP PROTECTION SPECIALIST PERSPECTIVE

There are two things that I find most peculiar about the employees' comments:

How little some employees understand about what’s at stake when a company’s trade secrets are leaked, and/or have any appreciation of the steps a brand owner must take to protect their trade secrets; and
That the reported actions Snapchat has taken (which the employees are complaining about) is essentially what we in the IP protection profession would recommend.
The Snapchat employee mindset (according to the reports) leads me back to a previous blog post of mine titled, “Trade Secrets Protection-Mindfulness”, posted on October 17, 2017. https://ip-pi-blog.com/2017/10/31/trade-secrets-protection-mindfulness/

Here is a segment of that post:

"How do you raise the trade secrets protection mindfulness of your employees?

"The answer is Training.

"Just as companies have devoted training resources to raising the “mindfulness” to workplace violence and sexual harassment (to minimize their risk to such episodes and how to respond when they occur), companies need to devote resources to “trade secrets protection mindfulness training.”

THE DILEMMA

Unfortunately, companies often shy away from a policy that seems to indicate they do not trust their employees and visitors. But it is critical that they find the balance between trust and developing a robust “trade secrets protection mindfulness” culture.

THE REALITY

Companies [and employees] by necessity need to accept the times we live in and the bad actors out there that will go to extreme lengths to steal their “trade secrets.” Just as we all—in this age of terrorism—have learned to live with exhaustive airport screening to minimize the chance of being attacked, similarly, in this exponentially growing age of IP theft, companies need to accept the critical need to raise the “trade secrets protection mindfulness” of its employees to minimize the risk of their “trade secrets” being stolen."

CONCLUSION

It appears from the reporting that there is a deep divide between Snapchat’s justifiable determination to protect their trade secrets and some of their employees' reaction to it. You can even understand why some employees would be thrown by the tone of the warning from Snapchat’s general counsel, but that warning (in my opinion) only represents Snapchat’s exasperation with its proprietary information being leaked and their being at a loss with how to plug it up.

IN A FUTURE POST...

I will present some Trade Secrets Mindfulness Training ideas (IP protection specialists can consider presenting to brand owners) to help change the Trade Secrets Mindfulness culture of a company.

[1] https://www.thedailybeast.com/cult-like-language-snapchat-threatens-crackdown-jailtime-for-leakers

[2] https://www.bloomberg.com/news/articles/2012-03-15/china-corporate-espionage-boom-knocks-wind-out-of-u-s-companies

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