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Trade Secrets Issues in Cloud Computing

In Uncategorized on October 14, 2010 at 5:05 pm
Diagram showing overview of cloud computing in...
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Roy E. Hadley, Jr. and John L. Watkins have written a useful article on the legal issues relating to cloud computing.  As they state in the article, cloud computing refers to the practice of providing access to computer software through an Internet browser, with the software and data stored at a remote location at a “data center” or “server farm,” instead of on the computer’s hard drive or on a server located on the user’s premises.

The same protective measures that businesses apply to protecting trade secrets on local area networks (“LANs”) are likely to be useful in showing “reasonable” measures to a court.

Although it is difficult to predict how courts will react to trade secret claims based on information stored in cloud-based systems, a key factor will likely be the steps taken to maintain the secrecy of the information. Courts will likely inquire into whether the cloud provider has access to the data and whether it is bound to maintain the secrecy of such data. Other inquiries will focus on who from the client is permitted to have access to the information, password protection, and other security measures, much as in cases involving information stored on local networks.

It is possible that a cloud based provider may be able to demonstrate a higher level of security than that used in a client’s local area network. Much of the inquiry will focus on the particular architecture used. Nevertheless, because cloud-based technology is relatively new, clients with trade secret information should pay careful attention to documenting the security of the system before moving such important information to a cloud-based application.

By CHARLES JUNG

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