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.
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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 firstname.lastname@example.org 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 +