Federal law seeks to protect and encourage healthy competition, and that protection extends to a company's proprietary information (also known as "trade secrets").
For that reason, it's a serious violation of federal law to steal or copy protected business information (18 U.S.C. 1832). A conviction under this statute can result in crippling fines and many years in federal prison.
The federal government intensely scrutinizes the unauthorized transfer of intellectual property. Civil litigation often runs alongside criminal proceedings, creating discovery risks and complicating defense efforts.
If you're accused of stealing trade secrets, a comprehensive legal defense is critical to minimizing your exposure and safeguarding your reputation from ruin.
At Eisner Gorin, LLP, our experienced federal criminal defense attorneys will scrutinize every detail of your case and the available evidence to develop strong defense strategies to achieve the best possible outcome.
What Constitutes Theft of Trade Secrets Under 18 U.S.C. 1832?
Theft of a trade secret occurs when someone knowingly steals, copies, buys, or receives protected business information with the intent to derive financial benefit from it and to cause harm to the owner.
It should also be noted that under this statute, attempts or conspiracies to steal trade secrets are subject to the same criminal charges as the actual theft. In other words, you can be charged under U.S.C. 1832 if you:
- Attempted to steal or obtain trade secrets but failed in your attempt; or
- Conspired with someone else to obtain the trade secrets, whether or not you succeeded.
What Is a Trade Secret?
Under federal law, the term "trade secret" can include virtually all types of confidential business, technical, and/or financial information. As long as the business owner uses the information to derive economic value and takes steps to keep it secret, it qualifies as a trade secret.
Common examples of trade secrets might include:
- Financial insights
- Proprietary methods and procedures
- Patterns, plans, and designs
- Software codes
- Design prototypes
What Must Prosecutors Prove to Convict Me of Stealing Trade Secrets?
To secure a conviction under 18 U.S.C. 1832, the government must prove:
- The information in question qualified as a trade secret;
- You knowingly stole, hid, or copied that information without authorization, OR purchased or obtained the information knowing it was stolen;
- You intended to convert the information for the benefit of anyone other than the rightful owner; and
- You knew it would cause harm to the owner and/or intended such harm.
Can I Be Charged if I Never Used or Disclosed the Alleged Trade Secret?
Yes, you can. Under U.S.C. 1832, all prosecutors need to charge you with a crime is evidence that you knew the information was protected and that you stole it with the intent of using or disclosing the information--even if you never actually did so.
How Do Prosecutors Pursue Trade Secret Theft Cases?
Federal prosecutors build these cases by collecting digital forensic evidence and relying on circumstantial evidence to infer criminal intent. They often analyze the timing of data transfers and communications with competitors to establish a motive.
Evidence Collection Methods
Investigations into trade secret theft rely heavily on digital forensics. Law enforcement agencies use search warrants to seize computers, hard drives, and mobile devices and issue grand jury subpoenas to secure emails, text messages, and cloud access logs. This allows investigators to reconstruct a digital footprint showing when files were accessed, copied, or transferred.
Inferring Criminal Intent
Finding direct evidence of criminal intent can be challenging for prosecutors since someone who steals proprietary information is unlikely to document their plans. Thus, prosecutors must rely on circumstantial evidence, such as finding trade secrets on personal computers, tracing the timing of resignations/job changes, etc.
Parallel Civil Lawsuits
Criminal trade secret cases often run parallel to civil litigation. A former employer may file a civil lawsuit for misappropriation while also reporting the matter to law enforcement. Prosecutors can leverage these civil proceedings, using evidence gathered through civil discovery, such as documents and witness depositions, to build their criminal case and secure early witness statements.
What Are the Penalties for a Conviction Under 18 U.S.C. 1832?
A conviction for stealing trade secrets can result in up to 10 years in federal prison. Individuals and organizations also face massive financial penalties, restitution orders, and the forfeiture of illicit proceeds.
Individual Penalties
If you're an individual charged with trade secret theft under 18 U.S.C. 1832, you may be subject to the following penalties, if convicted:
- Up to 10 years in federal prison;
- Fines of up to $250,000;
- Mandatory restitution to the victim to compensate for financial losses; and
- Forfeiture of any property or proceeds derived from the commission of the offense.
Aside from these penalties, a conviction for trade secret theft can permanently mar your professional reputation, especially if you're in a high-profile position. Even if you receive a modest sentence, trust may be eroded to the point that you find yourself virtually unemployable in your industry in the future.
Organizational Penalties
Corporations and other entities can also be charged for trade secret theft. If an organization commits an offense under this statute, it can face fines up to the greater of $5,000,000 or three times the value of the stolen trade secret to the organization.
How Can My Attorney Defend Against Trade Secret Theft Charges?
A skilled federal criminal defense attorney will defend against charges under 18 U.S.C. 1832 using strategies such as showing the information wasn't legally a trade secret, you were authorized to take the information, or acquired it lawfully, or you lacked the necessary criminal intent.
Common strategies used by Eisner Gorin attorneys to combat trade secret theft charges include, but are not limited to:
- Information is Not a Trade Secret: We argue that the data was publicly known or standard within the industry. Additionally, we examine the company's security measures. If the company did not take reasonable steps to maintain secrecy—such as using non-disclosure agreements, passwords, or keeping documents in public view—the information may not legally qualify as a trade secret.
- Lawful Acquisition or Independent Development: If applicable, we show that you developed the information independently using your own skills and knowledge or through reverse engineering.
- Lack of Criminal Intent: We demonstrate that the data was downloaded or copied for legitimate business purposes--for example, maybe you backed up files to work from home or for other legitimate administrative reasons with no intent to harm the owner or benefit a competitor.
- Authorization: We show that you had explicit or implied consent from the company to access, copy, or possess the specific files in question.
Hypothetical Case Study
To illustrate our defense methods in cases like these, consider the following hypothetical scenario: David is a lead scientist at a prominent technology firm who resigns his position to accept a lucrative position at a competing company.
Shortly before submitting his resignation, he backs up several years of his research folders to a personal cloud storage account. The former employer discovers the data transfer and contacts federal authorities. David is charged with theft of trade secrets under 18 U.S.C. 1832.
Our Defense Strategy
To combat these allegations, our firm structures a comprehensive defense targeting the technical evidence and the element of intent. This includes:
- Obtaining the cloud backup storage logs, communication records, and other forensics, and retaining digital forensics analysts to review the data and records.
- Filing all applicable pre-trial motions to preserve exculpatory evidence and suppress any evidence obtained through illegal search and seizure or through search warrants that lacked probable cause or were too broad in their scope.
- Subjecting the government's forensic timeline to a multi-lawyer review, obtaining multiple internal opinions on the evidence to ensure the strongest defense plan.
The Outcome
In our case review, our analysis reveals that the cloud backup was not the result of a manual, targeted theft. Instead, it was part of an automated, routine synchronization process that had been running on David's computer for over a year.
We also discovered that David never accessed, shared, or utilized the cloud backup after leaving the company, so there was no harm to the owner. Presenting this evidence to the judge and prosecution resulted in a complete dismissal of the charges.
Protect Your Reputation and Your Future
Theft of trade secrets under 18 U.S.C. 1832 is a serious federal offense, one that federal prosecutors pursue aggressively. Not only can the accusation threaten your freedom, but it can also do untold damage to your professional reputation, especially when it comes to positions of trust.
A successful defense against these allegations requires dismantling the government's narrative surrounding intent and the classification of the proprietary data. The complexities of digital evidence and federal statutes demand meticulous analysis and precise execution.
At Eisner Gorin, LLP, our legal team has broad experience with cases like these, and we know how to leverage our expertise to minimize your exposure and the risks to your career and freedom.
If you have one phone call from jail, call us! If you are facing criminal charges,