Theft of Trade Secrets

Theft of trade secrets has historically been a hard area to prosecute. Due to the relative ease of accessing and transporting information as opposed to tangible goods, “industrial espionage” has become more and more prevalent as firms seek to gain an edge over rivals. Furthermore, since the stolen information often remains undisturbed and available to the owner, such theft can be virtually undetectable. Since the enactment of the Federal Economic Espionage Act of 1996 (EEA), the theft of trade secrets is a federal offense. It is important to understand this law and its implications.

What is a trade secret?

The EEA defines a trade secret as that which is “not generally known to, and not readily ascertainable through proper means by the public.” While protecting scientific and technical information, this broad language also covers such business information as marketing data and customer lists. Such information is protected regardless of the form it is in, which means even memorization of trade secrets can constitute misappropriation.

What are the rules?

The applicable rules of the EEA are divided into two sections, and which one is applicable depends upon whether the theft was intended to benefit a foreign government or not. If so, the taking, receipt, duplication, communication, or alteration of trade secrets are prohibited, as well as any attempts or conspiracies toward these acts. If the trade secret theft was not intended to benefit a foreign government, then the nature of the secret determines whether the second section is applicable. In order for the act to constitute trade secret theft in this case, there must exist an intent to convert a secret “related to or included in a product” for economic benefit. This strange wording excludes domestic “information terrorists,” whose intent is purely malicious. It also seems to exclude any information related to services, the fastest-growing segment of the economy.

What are the penalties?

The consequences for violations of the EEA depend upon whether the offender was an individual or an organization, and whether the act was intended to benefit a foreign government. If “general,” or not for the benefit of a foreign government, an individual faces a maximum of $250,000 in fine and 10 years imprisonment. An organization charged with the “general” offense faces up to $5 million in fines. If either the individual or the organization intended to benefit a foreign government, the fines and imprisonment double.

If you find yourself facing criminal charges, it is important to find an experienced white collar attorney to represent you.  The attorneys of Parkman White, LLP have a history of success in the court room and are ready to represent clients nationwide.

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