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Trade secret pirates and IP thieves cost the U.S. billions

Economic espionage is a major problem, and companies need to fend for themselves

While the patent war among high-tech companies (and, often, patent trolls) takes up a lot of the headlines these days, intellectual property theft comes in many different shapes and sizes. The theft of trade secrets and other forms of economic espionage are serious problems for U.S. companies, and there are major economic consequences that result from this wrongdoing. 

I recently spoke with Gary Lincenberg, principal at Bird Marella and former assistant U.S. attorney, about this topic. He spoke of economic espionage and how companies often must fend for themselves with civil suits. This is partly due to the fact that, since much of this criminal activity originates overseas, it is difficult to prosecute, and it is often unclear if the wrongdoer can be extradited.

But, says Lincenberg, as U.S. treaties with foreign governments strengthen and our ability to capture information from the cloud improves, we will be less dependent on traditional subpoenas to get hard copies of documents. This means that barriers are diminishing and politicians will soon be in favor of reallocating Department of Justice resources to fight espionage, since these crimes hurt the national economy.

For inside counsel, there are a number of questions that stem from economic espionage. When you have suspicion of a threat, how do you go about gathering evidence? Do you launch a civil suit or obtain outside counsel? When should you alert the government, and which agency do you alert? How do you assemble a case to present to them?

Lincenberg discussed several cases he knew intimately. In one example, in the hospitality industry, a worker left a large company to go to a competitor. The previous employer feels he took intellectual property with him in the form of his knowledge and skills, but the U.S. attorney declined to prosecute. Employees are portable, after all, and this would have ramifications on employee movement. What workers have in their minds is the foundation companies build on, and the business in question was attempting to use the U.S. attorney as a cudgel, but this turned out to be nothing more than a case of alleged domestic espionage. 

In another example, an aerospace industry company called Lincenberg. The company had camera footage of an employee sneaking into an office after hours and taking materials home from a design drawer. The employee in question was in communication with foreign nationals. Lincenberg had to decide whether to take the case to the federal or state authorities. He decided to do both. He knew the federal government had broader powers and would do a thorough job, but he felt he needed to get in a quick hit. The DA went forward, got a quick arrest and prosecution, and the wrongdoer was sentenced to prison time. While a federal case could have resulted in a longer sentence, Lincenburg had to decide how to proceed to get the best result in the shortest amount of time.


For more stories on this topic, check out the following:

IP: Battling against foreign trade secret theft

A primer on 4 notorious recent cyber-attacks

Ex-Motorola employee gets four years for trade-secret theft

Senior Editor and Community Manager

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Rich Steeves

Richard P. Steeves is Senior Editor and Community Manager of InsideCounsel magazine, where he covers the intellectual property and compliance beats. Rich earned a B.A....

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