Can a company claim its diversity data is a trade secret?

On Behalf of | Feb 22, 2019 | Trade Secrets |

We have talked about trade secrets, a type of intellectual property that has no government process of registration like copyrights or trademarks. Yet, trade secrets can be highly valuable and important to the success of a business. A trade secret is specific information within a company that, if it became public or were discovered by another company, could have negative impact on the trade-secret owner’s competitiveness and economic success.

Normally, we think of these kinds of company assets as potential trade secrets:

  • Customer lists
  • Product formulas
  • Manufacturing methods
  • Recipes
  • Product specifications
  • Pricing or marketing strategies

The Harvard Business Review is reporting an unusual assertion by technology companies that their diversity data and internal strategies to boost diversity in their workforces are protected trade secrets. The Harvard article is written by a law professor about her research in this area.

Georgetown University Associate Professor of Law Jamillah Bowman Williams asserts that trying to make diversity-in-hiring data a trade secret likely “harms diverse talent, hinders transparency and accountability, and limits the potential of diversity efforts to advance workplace equity.”

She continues that the “tactic seems to be aimed more at avoiding bad publicity than remaining competitive” and that it may be an attempt to keep talented employees and executives from jumping ship. The author provides the example of a diversity officer who left one tech company for another to start a similar program. The original employer sued on a trade secret theory, but the case settled.

Another example is the use of a trade-secret argument to ask a court to seal diversity data shared in a discrimination lawsuit as part of discovery. In that case, the court did seal the data on that basis.

Williams argues that using trade-secret doctrine this way will ultimately harm diverse employment because people of color, women and employees affiliated with other protected groups are often the very people who hold positions protecting and promoting diversity. She also expresses skepticism about diversity data providing a “competitive advantage in a way that needs to be protected by trade secret law.”

We will keep an eye on the use of this trade-secret theory in the legal space and report back here.