Is Diversity Data a Trade Secret?

March 4, 2018

International Business Machines Corporation, more commonly known by its moniker “IBM,” alleges that the work it put into capturing and retaining a diverse set of employees is a protectable trade secret in a recent lawsuit. Lindsay-Rae McIntyre used to be the chief diversity officer at IBM, where she managed groups that developed tools and methods, based on artificial intelligence, to “track career development, recommend growth and promotion opportunities and measure diversity metrics.” On Sunday, February 11, Microsoft announced that it was bringing on McIntyre as its next chief diversity officer. IBM filed a lawsuit against McIntyre the very next day, claiming that the knowledge she possesses about their diversity data and initiatives can cause proximate competitive harm. IBM is suing to enforce a one-year non-compete clause that appears in McIntyre’s employment contract.
While it is definitely uncommon for a company to allege that information such as diversity data is a trade secret, and it may in fact be the first lawsuit of this kind, IBM’s allegations must not be summarily dismissed. Typically, when someone hears mention of the words “trade secret,” secret formulas, cutting edge technologies, customer lists, or business strategies come to mind. But, what really matters in determining whether or not something is a trade secret—and the real issue here—is whether the contested information can give competitors an advantage. In its complaint, IBM points to Microsoft’s very own claims in a separate lawsuit involving a class action gender discrimination dispute. In that case, Microsoft asked the court to keep its diversity data and strategies under seal for fear that revealing such information would cause Microsoft to suffer competitive harm.
Many large technology firms have been under fire, facing public criticism for the lack of diversity in their workforces. Logically then, it makes sense that IBM claims Microsoft stands to gain a competitive advantage not only in acquiring diverse talent, but also in gaining business from customers who value diversity, by acquiring McIntyre and her knowledge from IBM’s diversity initiatives.   IBM even struggled itself with a public image issue back in the mid-1990’s, launching a diversity campaign to break free from being seen as merely “white men in dark suits.” Efforts since then have significantly increased the diversity of IBM’s management team and some tech industry consultants argue that this does give IBM an edge over competitors in the industry.

While this lawsuit raises the technical question of whether or not diversity data and practices may be considered trade secrets, it also raises policy concerns beyond mere black letter law. Even if it can technically be classified as a trade secret, should it be?

Is this not the type of information that we want to proliferate across industries for the common good? While many companies have preciously kept their diversity data secret, that was largely because of concerns of public outrage upon revelation of a company’s lack thereof. More recently, however, large tech firms have begun to make their diversity data public, embracing transparency. Google and Apple, for example, have each made their diversity data public. Opponents of IBM’s stance argue that growing diversity in the industry is not a zero-sum game; everyone in the industry stands to benefit from sharing this type of information. Despite the fact that IBM might have an economic incentive to keep this information secret from competitors, the tech industry—and society as a whole—seems like it would benefit more if this information was free-flowing. A rising tide, after all, lifts all boats.