THINGS TO AVOID WHEN YOU LEAVE YOUR JOB: Using drone trade secrets to blackmail your former employer

Trade secrets cases in the employment context usually provide valuable lessons on what not to do when leaving a job.  The recent conviction of Stephen Marty Ward by a Washington federal jury imparts one such lesson:  when you are terminated after working on a project for the Navy involving drones, don’t threaten to blackmail your former employer with trade secret disclosure.

Mr. Ward learned this lesson the hard way.  He worked as a contract employee for a Boeing subsidiary (Insitu, Inc. in Bingen, Washington) that contracted with the U.S. Navy to develop unmanned aircraft systems, or drones.  Mr. Ward worked as a technical writer preparing maintenance manuals for one of the drones.

When Mr. Ward’s employment was terminated after less than three months on the project, he saw an opportunity.  He allegedly kept some of the drone manuals and informed his former colleagues that he had a “substantial amount of data” and “wanted a healthy settlement to go away and not make a fuss.”  This, of course, triggered the interest of the U.S. Navy, the Department of Homeland Security, and the FBI.  According to the criminal complaint, following several recorded telephone conversations, Mr. Ward ultimately demanded $400,000 to return the manuals and agreed to meet at a restaurant in Floyds Knobs, Indiana to exchange the information for a $10,000 “up front” payment.  The exchange did not go as he had planned.

Mr. Ward was indicted for trade secret theft under 18 U.S.C. § 1832(a)(2) and on April 28, 2014, following a three-week jury trial, a federal jury in Eastern District of Washington found him guilty.  Among other findings in the verdict form, the jury found that the drone manuals contained trade secrets about the fuel system, turret, wing payload tray capability, tail, and muffler of the drones (yes, drones need mufflers too).  Mr. Ward will be sentenced on July 10, 2014.