Theft Of Trade Secrets Prosecutions
📌 Overview: Theft of Trade Secrets in U.S. Law
The theft of trade secrets involves the unauthorized acquisition, use, or disclosure of confidential business information that gives a company a competitive advantage. This is a serious crime under both civil and criminal law.
The primary federal criminal statute is the Economic Espionage Act (EEA) of 1996, codified at:
18 U.S.C. § 1831 — Economic espionage (trade secret theft for the benefit of a foreign government or agent)
18 U.S.C. § 1832 — Theft of trade secrets for commercial advantage
Prosecutions under these statutes require proving:
The defendant knowingly stole, copied, or received trade secrets without authorization
The trade secret was related to a product or service used in interstate or foreign commerce
The defendant intended to benefit someone other than the owner, such as a competitor or foreign entity
⚖️ Key Elements in Trade Secret Theft Cases
Existence of a trade secret — information must be secret, valuable, and subject to reasonable efforts to maintain secrecy
Unauthorized acquisition or use
Intent to convert or benefit commercially or for economic advantage
Interstate or foreign commerce nexus
⚖️ Detailed Case Law on Theft of Trade Secrets
1. United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012)
Facts:
Aleynikov, a former Goldman Sachs programmer, copied proprietary source code before leaving to join a competitor.
Legal Issue:
Whether the stolen code constituted a trade secret under the EEA, specifically if the code was related to a product in interstate commerce.
Ruling:
The Second Circuit reversed Aleynikov’s conviction, holding the government failed to prove the code was related to a product used in interstate or foreign commerce.
Importance:
Established the importance of proving the “interstate commerce” nexus under the EEA.
Highlighted limits on prosecution scope for trade secrets related to internal-use software.
2. United States v. Lange, 312 F.3d 263 (7th Cir. 2002)
Facts:
Lange was convicted for stealing trade secrets involving medical device technology from his employer.
Legal Issue:
Whether unauthorized downloading and transmission of confidential data constituted trade secret theft under 18 U.S.C. § 1832.
Ruling:
Conviction upheld; the court found clear evidence Lange knowingly stole confidential proprietary information.
Importance:
Demonstrates broad interpretation of “theft” including electronic copying.
Emphasizes protection of high-tech and medical trade secrets.
3. United States v. Hsu, 155 F. Supp. 3d 1141 (N.D. Cal. 2016)
Facts:
Hsu, an engineer, copied confidential information about semiconductor manufacturing processes to a personal device before joining a competitor.
Legal Issue:
Whether Hsu’s actions constituted theft of trade secrets under the EEA.
Ruling:
Court denied defendant’s motion to dismiss, finding sufficient evidence of misappropriation.
Importance:
Highlights misappropriation through electronic transfer as a basis for criminal liability.
Shows courts’ willingness to prosecute technology industry trade secret theft aggressively.
4. United States v. Nosal, 676 F.3d 854 (9th Cir. 2012)
Facts:
Nosal was prosecuted for encouraging former employees to access a company’s confidential database for a competitor.
Legal Issue:
Whether employees’ unauthorized access violated the Computer Fraud and Abuse Act (CFAA) and constituted trade secret theft.
Ruling:
The Ninth Circuit limited CFAA application, but the case also involved trade secret claims under EEA and state law.
Importance:
Revealed the intersection of trade secret theft and computer misuse laws.
Illustrated limits on broad CFAA prosecutions but confirmed criminal trade secret liability.
5. United States v. Richey, 632 F.3d 559 (9th Cir. 2011)
Facts:
Richey, a former engineer at Boeing, downloaded confidential aerospace technology documents before leaving for a competitor.
Legal Issue:
Whether such conduct constituted theft of trade secrets under the EEA.
Ruling:
Conviction affirmed; court found clear evidence Richey knowingly misappropriated trade secrets to benefit another employer.
Importance:
Reinforces prosecution of employees who steal sensitive aerospace and defense trade secrets.
Affirms strong federal protection of national security-related technologies.
6. United States v. Kwan, 407 F.3d 1005 (9th Cir. 2005)
Facts:
Kwan was convicted for stealing and transmitting trade secrets involving software technology.
Legal Issue:
Whether transmission of proprietary code via electronic mail was theft under the EEA.
Ruling:
The conviction was upheld; the court affirmed electronic transmission of trade secrets is theft.
Importance:
Highlights criminal liability for digital transmission of trade secrets.
Emphasizes the modern scope of trade secret protection.
🧾 Summary Table of Trade Secret Theft Cases
| Case | Statute | Key Legal Point |
|---|---|---|
| U.S. v. Aleynikov | 18 U.S.C. § 1832 | “Interstate commerce” nexus required for conviction |
| U.S. v. Lange | 18 U.S.C. § 1832 | Electronic copying constitutes theft |
| U.S. v. Hsu | 18 U.S.C. § 1832 | Misappropriation via electronic transfer |
| U.S. v. Nosal | CFAA and EEA | Limits on CFAA but confirmed trade secret liability |
| U.S. v. Richey | 18 U.S.C. § 1832 | Theft of aerospace trade secrets to benefit competitor |
| U.S. v. Kwan | 18 U.S.C. § 1832 | Electronic transmission equals theft |
🔍 Prosecutorial Focus in Trade Secret Theft
High-tech, aerospace, biotech, and medical sectors are common targets.
Electronic copying, transmission, and cloud theft are primary methods.
The government focuses on intentional misappropriation to benefit a competitor or foreign entity.
Cases often involve complex technical evidence about secrecy and value of information.
🧩 Conclusion
Theft of trade secrets prosecutions under the EEA have developed robust case law balancing:
Protection of businesses’ confidential information
Defendants’ rights to fair notice and proof of interstate commerce nexus
Adaptation to technology-enabled theft (digital copying and transmission)
The cases demonstrate federal courts’ commitment to safeguarding trade secrets while ensuring statutory limits.
RELATED Blog
0 comments