Trade Secrets — When Civil Liability Becomes Criminal

In Federal Court in California yesterday, a former Boeing engineer was sentenced under to 188 months in prison for having disclosed certain Boeing-owned trade secrets to China.

It’s never good to disclose another parties’ trade secrets, but when that other party is doing work for the U.S. government, it’s an ever worse idea. While many people don’t realize it, a misappropriation of trade secrets is not just a civil issue, it can be criminal as well.

The U.S. Economic Espionage Act of 1996 makes the theft or misappropriation of some trade secrets a federal crime. In broad stokes, that Act defines a trade secret to include all forms of scientific, technical, financial, business, or economic information, including patterns, plans, compilations, program devices, designs, methods, techniques, formulas, processes, procedures, programs, or codes irrespective of how they are stored or compiled, whether tangible or intangible, memorialized, photographed or in writing, provided the owner has taken reasonable measures to keep such information secret, and the information derives actual or potential independent economic value from not being generally known to, or readily ascertainable through proper means by, the public. It states that one will be criminally liable if, intending or knowing that his or her conduct “will benefit any foreign government, foreign instrumentality, or foreign agent, [the defendant] knowingly:

steals or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret;
without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret;
receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization;
attempts to commit any offense described in any of paragraphs (1) through (3); or
conspires with one or more other persons to commit any offense described in any paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy shall be liable for the recited penalties.”
The Act is not intended to preempt state civil remedies dealing with the misappropriation of trade secrets, which means that — if things could be any worse than being charged with a federal crime — this Act permits it. So while I offer the foregoing as a cautionary tip, I suspect that those reading this are not truly the ones in need of a reminder.

Jonathan Pink is an intellectual property and commercial litigator resident in Bryan Cave’s Irvine (Orange County) and Los Angeles Offices. He specializes in high-stakes copyright, trademark and patent infringement suits, and regularly defends claims for breach of contract, misappropriation of trade secrets and related business torts. He can be reached at 949-223-7173 or at jonathan.pink@bryancave.com.