Tag Archives: trade secrets

Tougher Trade Secret Penalties.

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While trade secret theft is generally addressed through civil suits, criminal punishment is increasingly being used as a deterrent by the federal government.

The Economic Espionage Act of 1996 criminalizes trade secret theft committed for personal benefit within the country or for the benefit of a foreign government. Two recent amendments to the law will broaden the government’s ability to prosecute these cases and impose tougher penalties.

The Theft of Trade Secrets Clarification Act of 2012 clarifies the scope of the Economic Espionage Act of 1996 in light of U.S. v. Aleynikov, 676 F.3d 71 (2d Cir. 2012). In that case, the Second Circuit Court of Appeals overturned the criminal conviction of a programmer who stole the source code of his employer to establish a competing firm. The court held that the computer code failed to satisfy the statute’s requirement that the “product” was “produced for” or “placed in” interstate or foreign commerce. Under the amendment, which was signed into law by President Obama in December, the prohibition against the theft of trade secrets will now apply to a trade secret that is related to a product or service used in or intended for use in interstate or foreign commerce.

The Foreign and Economic Espionage Penalty Enhancement Act of 2012 will enhance the penalties for misappropriating trade secrets to benefit a foreign government. For individual offenders, the monetary limit for financial penalties would increase from $500,000 to $5,000,000. For corporations, it would increase from $10,000,000 to the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided. The legislation was passed by Congress and is now awaiting the President’s signature.

we encourage you to contact one of our experienced intellectual property attorneys for a free 30-minute consultation.

How Can I Help?

As these new laws highlight, it is imperative for businesses to carefully guard all proprietary information and make sure that all employees understand what constitutes a protected trade secret. For more information about how to best protect your trade secrets, contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

You are hereby banned!

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DuPont Co. was recently awarded a 20-year permanent injunction in a trade secrets misappropriation case involving its Kevlar technology. The court order bans Korean textile maker Kolon Industries Inc. from making a competing high-strength fiber.

The court order demonstrates the severity of the remedies available in a trade secrets case. Kolon was already ordered by a federal jury to pay DuPont $919.9 million in damages last September.

The lawsuit involved the theft of 149 trade secrets relating to DuPont’s high-strength synthetic fiber used in bulletproof vests, military helmets, tires, brakes and fiber-optic cables. DuPont alleged that Kolon recruited its former employees and used DuPont’s proprietary business information to create its competing product, Heracron fiber.

In instituting the lengthy injunction, U.S. District Judge Robert Payne noted that the damages award would not prohibit Kolon from using the stolen trade secrets at DuPont’s expense. As detailed by Reuters, Payne further stated that DuPont might have to go to South Korea to enforce the judgment.

“That Kolon found it necessary as a matter of corporate policy to misappropriate DuPont’s trade secrets to augment the knowledge and efforts of its own research staff illustrates that, left to its own devices, Kolon simply would not have developed the trade secrets it misappropriated,” Payne wrote. Kolon has requested that the injunction be stayed pending an appeal.

This case demonstrates the significant economic impacts of trade secret misappropriation. The ruling in this case, if upheld, will likely have a significant impact on the future success and failure of both companies involved.

How Can I Help?

If you need help to keep your secrets or determining how best to protect your ideas, or know someone that can use my help, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney. As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

When Does Trade Secret Theft Become a Federal Crime?

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Trade secret theft is generally addressed through the civil lawsuits. However, in some cases, the misappropriation of trade secrets can rise to the level of a federal crime. The Economic Espionage Act of 1996 criminalizes trade secret theft committed for personal benefit within the country or for the benefit of a foreign government.

Section 1831 addresses foreign economic espionage and requires that the theft of a trade secret be done to benefit a foreign government, instrumentality, or agent.  The elements of the crime include:

  • The defendant intended or knew his actions would benefit a foreign government, foreign instrumentality, or foreign agent;
  • The defendant knowingly received, bought, or possessed a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; and
  • The item/information was, in fact, a trade secret.

Meanwhile, Section 1832 involves the misappropriation of a trade secret with the intent to convert the trade secret to the economic benefit of anyone other than the owner and to injure the owner of the trade secret. The elements of the crime include:

  • The defendant intended to convert a trade secret to the economic benefit of anyone other than the owner;
  • The defendant knowingly received, bought, or possessed a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization;
  • The item/information was, in fact, a trade secret;
  • The defendant intended, or knew, the offense would injure the owner of the trade secret; and
  • The trade secret was related to or included in a product that is produced for or placed in interstate or foreign commerce.

Of course, prosecutors will not pursue every case that meets the above criteria. As detailed by the Department of Justice, U.S. Attorneys will evaluate evidence of involvement by foreign agents, the type of trade secret involved, the degree of economic injury, the effectiveness of civil remedies, and the potential deterrent value before deciding whether to bring a criminal action.

How Can I Help?

Protecting against trade secret misappropriation should not just be an important priority for the federal government, but for all businesses. To make sure you are protected, please contact me for a free 30 minute consultation by sending me an email or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities.  Connect with me on Google +

Norman