Of Course Mark Hurd Is Going To Divulge Trade Secrets. But Which Secret Is HP Afraid Of?

Of Course Mark Hurd Is Going To Divulge Trade Secrets. But Which Secret Is HP Afraid Of?

Of Course Mark Hurd Is Going To Divulge Trade Secrets. But Which Secret Is HP Afraid Of?

A blog about business, finance, and economics.
Sept. 10 2010 1:55 PM

Of Course Mark Hurd Is Going To Divulge Trade Secrets. But Which Secret Is HP Afraid Of?

A lot of people were scratching their heads earlier this week, when Hewlett-Packard announced that it was suing its recently departed CEO Mark Hurd , just as he'd said he was going to work for Oracle. HP accuses Hurd of putting "HP's most valued trade secrets and confidential information at peril." Consensus seems to be that HP will not succeed, and that the lawsuit was just an expensive bunch of sour grapes. Felix Salmon , for example, wrote: "It looks very much like it was filed in a fit of passion after hearing that Hurd had signed on with Oracle. There's no tactical or strategic rationale for this: it's just petulance, really."

I don't disagree, exactly, but it got me thinking: What exactly constitutes a trade secret? The concept, as defined by the World Intellectual Property Organization , is straightforward: "any confidential business information which provides an enterprise a competitive edge may be considered a trade secret." You might naively interpret that as something that's absolutely proprietary and essential to a company's business, like the secret recipe for Coca-Cola . As someone who's been asked to sign confidentiality agreements on occasion, though, I've been struck by how widely the idea of a trade secret stretches. Even really basic things about a business—like its market share, or who its biggest clients are—can constitute a trade secret.

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And thus while HP's actions might well be quixotic or vindictive or both, one of its assertions is, I think, unassailable: Hurd "cannot perform his duties for Oracle without necessarily using and disclosing HP's trade secrets and confidential information to others." Over the course of his time as CEO, Hurd must easily have absorbed hundreds of trade secrets about HP sales, markets, product lines, advertising strategies, you name it. It defies human nature to suggest that Hurd could turn off his brain every time he was about to cross the line into exposing part of HP's business. That's not a defense of the HP suit; on the contrary, if lawsuits were filed every time a high-level executive switched jobs, society would be crushed by an avalanche of litigation.

And then I looked at this morning's

Wall Street Journal

, which followed up on a story about

involving HP's business in Germany, Russia, and Eastern Europe. Although the investigations clearly date back to Hurd's period as CEO, the company got around to disclosing them in corporate filings only yesterday. Could HP be afraid that Hurd will tell someone about just how deep this problem goes in the company? It's a risky strategy, since the suit seems almost certain to inspire Hurd to utter contempt for his former employer. On the other hand, he was kind of already there, having been so hastily dismissed. At any rate, knowledge that the Justice Department and Securities and Exchange Commission are conducting an ongoing investigation into HP certainly seems to constitute a trade secret, and you can certainly see why HP would prefer that Hurd keep his mouth shut.

James Ledbetter is the editor of Inc. and the host of Panoply’s podcast Inc. Uncensored.