The Biggest Sports Scandal Yet? About Confidential Information and Trade Secrets

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Recently, the FBI and Justice Department announced their investigation into Major League Baseball’s St. Louis Cardinals. According to the announcement, evidence suggests that officials from the Cardinals may have hacked into the private computer networks of the Houston Astros, gaining unauthorized access to confidential information and trade secrets like scouting reports, player evaluations and trade details, among other information. Some are saying this is bigger than the NFL’s “Spygate” and, perhaps the biggest sports scandal of all time, if the allegations prove out.

Cyber-snooping is a cyber-crime

Such information may, at least, constitute confidential information and could, in many jurisdictions, be deemed statutory trade secrets. The federal Computer Fraud and Abuse Act prohibits unauthorized access of information stored on a computer. Penalties under this and other potentially applicable laws range from civil fines to criminal jail time, not to mention the possibility of fines and other penalties to be levied by MLB.

In “Spygate," the New England Patriots were accused of video tapping opposing teams play call signals in open-access spaces. Here, the Cardinals, and the unknown individuals, are being accused of accessing secure computer network facilities via the Internet.

Cyber espionage is unfortunately common in the corporate world, but relatively unheard of in the sports community, in part, perhaps, because most people don’t think of sports intelligence as protectable trade secrets. But, for a sports organization, formulas for player evaluation, scouting results, performance metrics and injury reports are as critical to success as the formula to Coca-Cola or the design plans for the hottest new gadget and teams spend millions, just like traditional businesses protecting and preserving these advantage-producing secrets.

The federal investigation dates back to 2013, and there appears still to be a long way to go before any formal accusations can be made, but the situation appears to be an important reminder of critical cyber-security concerns and vulnerabilities.

Sometimes we have to help ourselves

Without diminishing the seriousness and improper nature of the alleged activities, it is important to point out that investigators believe that Cardinals officials accessed the Astros systems with passwords previously used by current Astros General Manager, Jeff Luhnow, when he was an executive in the Cardinals organization.

Things to keep in mind

1. No matter how tempting, don’t go looking for competitive information in private places.

2. Warn employees not to cyber-snoop and not to bring third-party confidential information into the business.

3. Maintain confidential information and trade secrets in properly secured locations, supported by top-tier fire walls, access alerts, complex password configurations and sophisticated encryption.

4. Do not use and do not allow others to use/reuse passwords known to others. Require unique password changes frequently.

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