Eric E. Packel, Andrew Cripe, Daniel L. Farris, Scott M.

Gilbert, Matt Todd

Diamond Datascram Diaries:Diamond Datascram Development

Datascram Development

• General Privacy Issues

• Internal Issues and Risks

• Product and Customer Privacy Issues and Strategies

• Protecting the program

• Patent?

• Copyright?

• Trademark?

• Trade Secret

• The Human Resources System

• Employment Agreements and Restrictive Covenant Drafting

Press Release

Tech Expert Launches Diamond Datascram

Skokie, IL, March 1, 2017/Newswire/--

Diamond Datascram, founded by nationally honored software developer DamienDiamond, announces the launch of Datascram™. Datascram is an amazing newsoftware solution which identifies and prioritizes data, providing businesses with asummary of outdated or unnecessary data which then can be easily and permanentlydeleted or moved offsite. Analysis and surveys show that 52% of information storedby organizations is considered dark data whose value is not known. Another 33% ofdata is essentially obsolete or redundant. Datascram pulls information from thebusiness’ systems, applies algorithms and removes or culls that redundant and darkdata.

Make data scram. Forever

The Company is based in Skokie, IL but intends to operate nationwide.

Diamond Datascram

Diamond Datascram

Overview of Privacy Issues

For Technology-Enabled Companies:

Internal Privacy & Security Compliance– Personnel

– Customer Data

– Intellectual Property Protection

Product/Customer Privacy & Security Considerations– Privacy By Design

– Customer Compliance

Internal Privacy Issues

Privacy Program Development– Security Program

– Personnel Data

– Industry Regulations/Standards Compliance (HIPAA, ISO, NIST, PCI)

– Multinational Regimes (EU – GDPR, Privacy Shield, APAC, etc.)

– Vendor Management

Initial Steps– Gap Analysis/Privacy Assessment

– Policy Development

– Employee Training

– Exercises and Audits

Internal Privacy Risks

The Cyber Skills Gap is Growing– Companies are investing more than ever in cyber security

– Despite that fact, the number of successful attacks is increasing

– Cybercriminals are becoming more sophisticated at a faster rate

Phishing Example– In 60% of cases, attackers compromise an organization in minutes

– Median time to first click is 1:22

– 50% of recipient open the email within the first hour, 23% clickthrough

99.9% of attacks exploit known vulnerabilities

Product Privacy Issues

Customer Compliance– Develop Using Privacy By Design

– Build to a Standard

– Consider Customer Controls

– Solve for Security and Onward Transfer

Risks– Eliminating Data that Must be Retained (Regulatory or Policy)

– Impact on IP (Old Data is Sometimes Useful in Product Development)

– Protected Data (PHI, PII, Personal Data)

– Breach

Mitigation Strategies

Use the NIST Framework or ISO 27001/2 as aGuide for Cybersecurity Planning

Due Diligence – internal/external (vendors)

Operational

Contractual

Cyber-Insurance

Operational Strategies

Privacy by Design/Security by Design

“Minimum Necessary”

– Don’t collect more than what you need

– Don’t retain longer than you need it

Adopt/Adhere to Written Data Security Compliance Program

– Adopt Framework Standards

– Flow down to contractors

Technical controls: (e.g. encryption on all devices/unless can justify why not)

Physical security (e.g., data center security; geographically remote data centers)

Administrative safeguards (cybersecurity training/ regular risk assessments/ riskmitigation plans/audits)

Breach notification plan/Incident Response Plan

Readiness for new cyber-threats (Chinese hackers, economic espionage)

Cyber-insurance

The Datascram Program

What protections apply?

• Patent?

• Trademark?

• Copyright?

• Trade Secret

High Level Distinctions

Patents:

• Limited duration property right

• Related to invention

• Granted by U.S. Patent and Trademark Office

• Public disclosure after grant

Protectable Materials forPatents

• Machines

• Manufactured articles

• Industrial processes

• Chemical compositions

Trademarks

• Word, phrase, symbol, design

• Distinguishes and identifies the source ofgoods from one party to another

Copyright

Protects original works of authorship such as:

• Literary

• Dramatic

• Musical

• Artistic

Patent Protection

• Authority for patents

• Patent process

• Applicability to a situation

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Authority for a Patent

U.S. Constitution – Article 1, Section 8, Clause 8The Congress shall have power ... To promote the progress of science anduseful arts, by securing for limited times to authors and inventors the exclusiveright to their respective writings and discoveries;

United States Code, Title 35Patentability governed by Sections 100 – 105

101 – Patentable Subject Matter (process, machine, manufacture, orcomposition of matter)

102 – Novelty (anticipation/prior art)

103 – Obviousness (person of ordinary skill in the art)

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Application– Provisional

– Non-Provisional

Office Action– Non-Final

– Final

Issue Fee

Grant

Term: For patents filed after 1995, 20 years from theearliest filing date of the application on which the patentwas granted…

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Patent Process

Patent Components

Inventor

Assignee

Date (Priority/Filing/Issue)

Cited References, etc.

Abstract (Short Summary)

Figures/Drawings

Background (Problem)

Summary (Overview)

Detailed Description

Claims

The Human Resources System

An Effective “Human Resources System” starts withcomprehensive Workforce Visibility– Employees and Owners

– Interns (or, “Interns”/free labor)

– Contingent Workers

– Consultants, Independent Contractors & Vendors

Adopt scalable and practical approach (the system needs togrow with the Company)

Consider the “Terms and Conditions” applicable to allCompany “Human Resources”– Legal duties & classifications (FLSA, tax code, etc.)

– Non-Employee agreement terms critical

Workforce Policies

Why/When Written Policies?

What Must You Include?

What Needs Updating—and Why?

Written Policies? The Basics

Define Expectations/Culture

Help Avoid Certain Contract Claims

Can Help Provide A Good Defense

Comply with Law

Certain Policies are “Musts”

Anti-Harassment/EEO/anti-retaliation

FMLA

Confidentiality

Open Door/Hotline

Drug/Alcohol

No Right to Privacy/Monitoring

Wages/TO

“Musts” expand with Company

Certain Policies are Nice toHave

Will depend on businessneeds & culture:

Vacation/sick leave, PTO

Code of ethics & businessconduct

Standards of personalconduct (dress code,attendance, etc.)

The times they are a-changing

Firearms policies

Social media policies

Workplace violence prevention (and domesticviolence leave)

Drug testing and medical or legal marijuana

Compliance complaint and investigationsprocesses & hotlines (a challenge at start up!)

Remember Section 7

Section 7 provides that“employees shall have theright to self-organization, toform, join, or assist labororganizations, to bargaincollectively . . . And to engagein other concerted activitiesfor the purpose of collectivebargaining or other mutualaid or protection.”

Confidentiality

Not OK:

-”Do not discuss ‘customer oremployee information’ outsideof work including ‘phonesnumbers and addresses”

-”Never publish or discloseconfidential or otherproprietary information.Never publish or report onconversations that are meantto be internal”

OK:-”No unauthorized disclosure of‘business secrets’ or otherconfidential information”

-”Do not disclose confidentialfinancial data, or other non-publicproprietary company information. Donot share confidential informationregarding business partners, vendorsor customers”

Conduct Toward FellowEmployees

Not OK:

-”Don’t pick fights online”

-”Material that is fraudulent,harassing, embarrassing,sexually explicit, profane,obscene, intimidating,defamatory, or otherwiseunlawful or inappropriate maynot be sent by email.”

OK:

-”Making inappropriategestures, including staring”

-”No use of racial slurs,derogatory comments, orinsults”

-”Threatening, intimidating,coercing, or otherwiseinterfering with the jobperformance of fellowemployees or visitors”

Interaction with Third Parties(including media)

Not OK:-”Employees not authorized to speakto representatives of the printand/or electronic media aboutcompany matters” “unlessdesignated to do so by HR, and mustrefer all media inquiries to thecompany media hotline”

-”If you are contacted by any gov’tagency you should contact the LawDep’t immediately for assistance”

OK:-”The company strives to anticipateand manage crisis situations in orderto reduce disruption to ouremployees and to maintain ourreputation as a high qualitycompany. To best serve theseobjectives, the company will respondto the news media in a timely andprofessional manner only through

the designated spokespersons.”

Company Logos, Copyrightsand Trademarks

Not OK:

-”Do not use Company logos,trademarks, graphics, oradvertising materials in socialmedia”

-Company logos andtrademarks may not be usedwithout written consent”

OK:-”Respect all copyright and otherintellectual property laws. Forcompany’s protection (and yourown), it is critical that you showproper respect for the lawsgoverning copyright, fair use ofcopyrighted material owned byothers, trademarks and otherintellectual property, includingEmployers, copyrights, trademarksand brands”

Employment Agreements andRestrictive Covenants

• Q: Who needs an employment agreement?

• A: Not everybody.

• Consider less restrictive means:

• Offer Letters

• RCA / NDA

• Employee Handbook / Policies

Employment AgreementsThe Basics

• Title and Duties• Other employment

• Term• At-will or defined time period

• If at-will, what is the consideration?

• Compensation• Any bonus structure must be clear or linked to a plan.

• Stock / Equity awards must be carefully worded and consistent withany governing plan documents

• Benefits• Health Insurance, Vacation, Auto Allowance, Expenses

• Compliance with other policies

Employment AgreementsAdditional Considerations

Severance?– Define Cause – Under what conditions will severance not be owed?

– Preconditions, i.e. executing a waiver and release

Restrictive Covenants

Intellectual Property

Return of Property

Governing Law and Venue Selection

Arbitration

Incorporation of other Agreements

Attorneys’ Fees

Non-Disclosure / Confidentiality

Intellectual Property and Inventions

Non-Compete

Non-Solicit

– Clients and Customers

– Vendors and Suppliers

– Employees and Contractors

Restrictive CovenantsWhat Falls Under That Umbrella?

Geographic and Temporal Scope

– Where and for how long?

– Consider job duties.

Scope of the Restriction

– What can’t be done?

– Who can’t it be done with?

Will the covenants adapt to the employee’schanging roles with the Company?

Proper Tailoring is Critical

Know the State of Affairs

State law typically governs enforceability.

– California and North Dakota – Nope.

– Some states have unique rules, i.e. Illinois,Louisiana, Oklahoma, South Dakota.

Have you considered consideration?

Choice of Law and Venue

Fast Start Employment Servicesfor Start-Ups

To receive yourcomplimentary copy ofthis document, pleasecontact your PolsinelliLabor and Employmentattorney, or emailnational Practice ChairNancy Rafuse atnrafuse@polsinelli.com.

Keep Your Secrets Secret

Simply having a confidentiality provision is notadequate – employers must takedemonstrable steps to protect their secrets.

– Password protection.

– Usage restrictions, including personal emailaddresses.

– Limited distribution and access.

Datascram Dominance

Next time – Datascram has caught on like fire! Looking to go public andglobal. Competition for top talent is fierce! Topics next time:

• HR considerations with Mergers and Acquisitions

• Hiring from Competitors

• Staffing Arrangements

• Global HR/Legal Issues

SAVE THE DATE – MAY 9, 2017

Polsinelli provides this material for informational purposes only. The materialprovided herein is general and is not intended to be legal advice. Nothingherein should be relied upon or used without consulting a lawyer to consideryour specific circumstances, possible changes to applicable laws, rules andregulations and other legal issues. Receipt of this material does not establishan attorney-client relationship.

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