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Criminal Theft of Trade Secrets

Theft of trade secrets can be prosecuted at the state or federal level. Most commonly, and particularly within the last few years, the federal government has brought charges under the Economic Espionage Act (EEA), which is codified at 18 U.S.C. Section 1831-39. The EEA allows for prosecution when the government alleges that either a foreign government or agent will benefit (Section 1831) or even when the dispute is between private companies/individuals and a trade secret is alleged to have been misappropriated (Section 1832).

With the Department of Justice’s launch of the “China Initiative,” on November 1, 2018, there is even more focus and emphasis on prosecuting the theft of trade secrets alleged to be provided to Chinese companies or government entities. However, proving a violation of the EEA requires proof beyond a reasonable doubt of the following:

18 U.S.C. § 1832(a) – Theft of Trade Secrets

In order for a defendant to be found guilty of theft of trade secrets, the government must prove each of the following elements beyond a reasonable doubt:

  1. The defendant intended to convert a trade secret to the economic benefit of anyone other than the owner thereof;
  2. The trade secret is related to a [[product] [service]] [[used in] [intended for use in]] [[interstate] [foreign]] commerce;
  3. The defendant [intended] [knew] that the offense would injure any owner of that trade secret; and
  4. The defendant knowingly:
    [[stole] [without authorization [appropriated] [took] [carried away] [concealed]] [obtained by fraud] [obtained by artifice] [obtained by deception] such information];
    [without authorization [copied] [duplicated] [sketched] [drew] [photographed] [downloaded] [uploaded] [altered] [destroyed] [photocopied] [replicated] [transmitted] [delivered] [sent] [mailed] [communicated] [conveyed] such information];
    [[received] [bought] [possessed] such information, knowing the same to have been [stolen] [appropriated without authorization] [obtained without authorization] [converted without authorization]].

Under § 1832, the government must prove that the act of misappropriating the trade secret was intended for the economic benefit of a person other than the rightful owner (which can be the defendant or some other person or entity). Therefore, a person who misappropriates a trade secret but who does not intend for anyone to gain economically from the theft cannot be prosecuted under § 1832. This differs from § 1831 where foreign government activity is required, and the benefits may be non-economic.

The misappropriated information must fit the definition of a trade secret contained in 18 U.S.C. § 1839. The definition of the term “trade secret” in the EEA is very broad. It includes, generally, all types of information, however stored or maintained, which the owner has taken reasonable measures to keep secret and which has independent economic value.

  • The term “trade secret” is statutorily defined as all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if–
    • The owner thereof has taken reasonable measures to keep such information secret; and
    • The information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.

To learn more about prosecutions of trade secrets offenses, read our article in NACDL’s Champion Magazine.

At Jayne Law Group, we have represented individuals accused of theft of trade secrets and of violating the Economic Espionage Act. We understand the complexity of such cases and our team of lawyers and experts are prepared to defend such charges. We examine every aspect and element of the allegations to ensure that our clients receive the best possible defense in a trade secrets case.