Corporate trade secret theft: How to prevent it (and how to respond if it happens anyway)

Providing some tips that companies can take proactively to help prevent the loss of these valuable corporate assets

The threat of trade secret theft from U.S. businesses is real and complex. No business sector is immune. Understanding the nature of the problem with a keen focus on a strong compliance culture and accessing the available government resources can assist companies in managing this risk. Companies should also be poised to access the civil and law enforcement resources available to them if a threat occurs. Congress, the White House and federal law enforcement agencies have prioritized the investigation and prosecution of trade secret theft. In announcing the Administration’s strategic plan to combat trade secret theft, U.S. Attorney General Eric Holder stated that there are only “two categories” of companies affected by trade secret theft — “[T]hose that know they’ve been compromised and those that don’t know yet.”

With trade secret theft against U.S. corporations on the rise, the government has promised an increase in enforcement efforts using existing laws and two new federal laws designed to strengthen the Economic Espionage Act (EEA). More specifically, the Theft of Trade Secrets Clarification Act of 2012 expands the EEA’s coverage beyond products sold in interstate or foreign commerce and clarifies that the EEA also applies to trade secrets relating to products and services that a company uses internally. The Foreign and Economic Espionage Penalty Enhancement Act of 2012 increases the maximum penalties for the theft of trade secrets with an intent to benefit a foreign government or instrumentality. For organizations, the maximum fine is now either $10 million or three times the value to the organization of the stolen trade secret.

Responding if a breach occurs

What steps should a company take if, despite its best efforts, a trade secret breach occurs?

Contributing Author

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Z Scott

Z Scott is a partner in Kaye Scholer’s White Collar Litigation & Internal Investigations Practice in Chicago. She concentrates her practice on complex commercial litigation,...

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Contributing Author

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Elizabeth Pozolo

Elizabeth Pozolo is a litigation associate in Kaye Scholer’s Chicago office. She has significant experience in complex commercial litigation matters, class actions and corporate internal...

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