Encryption leads to new legal problems for businesses

Protecting the proprietary information of your company is one of your top priorities as a small business owner. Proprietary information can include almost anything your company wants to keep a secret including contracts and personal information of employees.

Technology is expanding how we use and store proprietary information. Many companies are turning to encryption to protect data they want to keep secret, but it could lead to problems when communicating. Encryption works by creating a key that is only shared by the users of protected information. You must have the key that unlocks the information, or it could be inaccessible or look like a random set of letters and numbers without the proper access.

One of the most popular ways individuals and businesses are using encryption is to mask their communication via apps like WhatsApp, Wickr and Signal. On its face, there is nothing wrong with companies communicating this way - but a gray area does exist when considering how or why it's used.

What's the intent?

Late in 2017, executives at Uber came under legal scrutiny for using encryption apps to discuss trade secrets. Despite their seemingly legal use, the executives ran into trouble when it was alleged that they used the encryption with the intent to avoid litigation for discussing the trade secrets.

Because the messages were encrypted, it would be difficult for a court to use them as evidence when deliberating trade secrets. Currently, companies are legally obligated to preserve records that could be used in litigation or are otherwise required by regulators, according to Reuters, which is where the Uber executives ran into trouble.

What does this mean for your business?

You might use an encryption app to communicate with business partners or associates, but it is important to keep in mind how that information might be preserved or discovered should a dispute arise. According to Recode, less than 30 percent of businesses are using online communication tools, which means that many are still reliant on email, phone calls, texting and paper file storage.

No matter where you stand on communication today, the drive toward digital communication and storage of records continues with encryption holding the key to security. However, what might be secure enough for secret discussions and proprietary information could be too secure when business disputes lead to litigation.