Trade secret theft has been a federal crime since 1996, with the passage of the Economic Espionage Act. But it wasn’t until 2010, with the U.S. Justice Department’s creation of the Task Force on Intellectual Property, that it became more common for federal prosecutors to bring trade secret cases.
The prospect of a criminal prosecution significantly raises the stakes for executives who have been accused of stealing an employer’s or a former employer’s trade secrets. If a former employer files a civil lawsuit against you, the potential downside is usually limited to an injunction and/or monetary damages. If you’re prosecuted criminally, you could be spending a few years in an orange jumpsuit.
Although the threat of criminal charges are a powerful deterrent to intentional theft of trade secrets, it’s also a Sword of Damocles hanging over the head of executives who have access to confidential information but no intention to ever steal it. As I’ve learned over years of representing those executives, what constitutes both “theft” and “trade secret” is open to a wide range of interpretation that frequently takes a judge or a jury to decide.
But there’s also a downside for companies that resort to criminal prosecution. First, you have to convince a prosecutor to press charges, and even if they do, the burden of proof in criminal court is higher than in civil court. And if you get a conviction, it doesn’t undo the damage that was done by the theft. If you file a civil lawsuit, at least you have a chance at recovering damages.