Lawsuit filed by Kodak
spotlights trade-secret issue

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The experience many former corporate managers, engineers and executives gained at major corporations such as Eastman Kodak Co., Xerox Corp., and Bausch & Lomb Inc. make them valuable to other companies as consultants.
Questions and conflicts arise, however, on where the line is drawn between the veteran’s expertise and the former employer’s trade secrets.
“It’s a very gray area,” said Eugene Fram, J. Warren McClure Research Professor of Marketing at Rochester Institute of Technology. “Sometimes you make that decision with great difficulty.”
The issue was thrown into the spotlight when Kodak filed a federal lawsuit last week. The complaint accuses two former employees of stealing company secrets and using them for personal gain.
Fram said many consultants decide where to draw the line based on their own comfort level.
“If they feel comfortable with it, they do it,” he said.
His rule of thumb, however, is if work involves using information from a former employer, get legal advice.
Douglas Foss, an attorney with Harris, Beach & Wilcox LLP, said lawsuits against former employees-turned-competitors are common–100 or more are filed each year in the Rochester area. Such suits are very hard for companies to win, he added.
As long as an individual is employed by the company, all the work product, inventions, patents and so on belong to the employer.
When an employee leaves, his or her fiduciary duty to the company generally ends.
The law, however, recognizes certain information as trade secrets.
“Even though you remember it, you cannot disclose it,” he said.
Foss agreed, however, that often the lines separating the two sides can be fuzzy.
Employers might consider industrial processes, pricing, customer lists and such as trade secrets.
“Facts are in the eye of the beholder,” he said. “The same thing can be looked at from different perspectives.”
He recommends working with an attorney familiar with that area of law.
“It’s very difficult to know,” Foss said. “You have to know the industry. You have to know the customers.”
And a lawyer’s advice that no law is being violated does not guarantee the company will not file suit, he said.
Both Foss and Fram suggest asking the companies involved.
“One of the things that telegraphs this is if the company had you sign a non- competition agreement,” Foss said. “That will tell you how important they think your work is.”
The allegations in the Kodak complaint go beyond former employees using knowledge and expertise gained on the job.
Kodak filed its complaint under the Racketeer Influenced and Corrupt Organizations Act. The suit accuses Harold Worden of Santee, S.C., Worden Enterprises Inc. and Kurt Strobl of Webster of repeated violations of the National Stolen Property Act, mail and wire fraud, and misappropriation of Kodak trade secrets.
Worden left Kodak in 1992 after 28 years with the company. He set up a consulting company a short time later.
Kodak claims he developed a scheme to steal and sell company secrets, including information on a state-of-the-art film- base machine.
The suit contends that Worden used trade secrets he possessed and recruited other former employees to provide their trade secrets.
Strobl, who worked at Kodak until the suit was filed, is accused of sending proprietary information and trade secrets to Worden. The complaint charges that Worden stole documents containing a range of confidential Kodak information.
U.S. District Court Judge Michael Telesca was expected as early as today to set a hearing date in the case. Kodak wants Telesca to prevent the former employees from using secrets it claims they stole.