As a top Chicago criminal lawyer, I am often confronted with situations where an employee’s alleged theft or conversion of his former employer’s purported trade secrets results in a potential or actual Federal criminal prosecution. This is not unlike numerous other situations where Leonard Trial Lawyers provides representation to employees in Federal and State criminal prosecutions that are premised upon their conduct in their workplace – usually their now former workplace. Indeed, Federal (and even State) prosecutions for alleged employment misconduct involving embezzlement, kickbacks, or mail or wire fraud are relatively common. However, many employees have no idea that their actions in taking, converting, using, or selling their employer’s trade secrets can result in them being federally prosecuted. In fact, most employees, and even many employers, view that type of conduct as a civil matter. Thus, many of the conversion or theft of trade secrets matters end up resulting in an injunction and underlying lawsuit being filed by the former employer against the former employee under the Federal or State statutes that provide a right of action in civil litigation for the employer. Employers may also bring claims in civil lawsuit for breach of fiduciary duty, or breach of duty of loyalty, among other claims, for the employee’s theft of trade secret activity. But the secret weapon that employers also hold is to refer the former employee’s alleged theft of trade secrets to the United States Attorneys’ Office for potential federal prosecution. In turn, if the case is strong enough, federal prosecutors can charge the employee/former employee under 18 U.S.C., section 1832, which is the statute that criminalizes the theft of trade secrets. The penalties are potentially harsh. An employee can receive a sentence of up to 10 years in prison – or more if the employee’s conduct is designed to assist a foreign government. In addition, a company (“organization”) who violates this statute can also face fines of up to “not more than the greater of $5,000,000 or 3 times the value of the stolen to the organization.” Accordingly, even the entity receiving the stolen trade secrets can face federal criminal responsibility, depending upon the facts and circumstances presented – i.e., this will be extremely fact dependent based upon the new employer’s or other organization’s alleged role in the theft of the trade secrets. In sum, employees and employers should be aware and beware of the federal criminal consequences of the theft of trade secrets. It is certainly always a great idea for employees and employers/organizations to have the advice and guidance of seasoned federal criminal trial lawyers, such as Leonard Trial Lawyers, when considering whether, and to what extent, to “cooperate” with or speak at all to federal agents who are conducting investigations of the possible theft of trade secrets.
Written by Michael Leonard
Leonard Trial Lawyers
November 8, 2022