The first option of the civil legal process has the obvious advantage of quick action at a time and place to be chosen by the company. Which option a company should choose depends on the circumstances of the theft and an understanding of the advantages and limitations of each option. Second, it can report the matter to the FBI for criminal prosecution under the Economic Espionage Act. First, it can handle the matter itself through a civil lawsuit seeking an injunction under the applicable state trade secret law to have a court enjoin the thief from using or disclosing the trade secrets and ordering the immediate return of the stolen information to the company. When a company finds itself the victim of a trade secrets theft, it has three active options.
Under what circumstances should a company report the theft of intellectual property to the FBI? What steps can a company take to make it more likely that a theft will actually be investigated and prosecuted by the Department of Justice? What steps can a company take to avoid criminal liability when new hires bring their former employers’ trade secrets into the workplace? The RAPCO and Boeing cases highlight three serious issues for companies to consider in relation to the Economic Espionage Act. While Boeing itself has not been criminally prosecuted, the Air Force has cancelled approximately $1 billion in rocket contracts with Boeing and has suspended Boeing from performing future rocket contracts. Another Boeing employee reported this conduct to Boeing management which immediately conducted an internal investigation and discharged both Branch and Erskine. Branch was allegedly lured to Boeing with the offer of a higher salary in return for his inside information on Lockheed Martin’s pricing.Īrmed with this pricing information, Boeing was able to outbid Lockheed Martin on 19 out of 28 Air Force contracts relating to rocket launching vehicles worth approximately $2 billion. Erskine, a Boeing engineer in 1996, had recruited Branch, a Lockheed Martin engineer, to leave Lockheed Martin to work for Boeing. A criminal complaint filed in June of this year charged two former Managers of Boeing Co., Kenneth Branch and William Erskine, for stealing more than 25,000 pages of trade secret protected pricing information belonging to its chief competitor Lockheed Martin Corp. Lange was convicted and sentenced to 30 months in prison.Ī company, however, can expose itself to potential criminal liability under the Economic Espionage Act when it hires an employee from a competitor for the purpose of gaining access to its competitor’s trade secrets. RAPCO reported Lange to the FBI, and the FBI arrested him in a “sting operation” in which Lange negotiated with an undercover FBI Agent for a data copy of RAPCO’s manufacturing processes. There, RAPCO, a manufacturer of aircraft parts, learned that Lange, a disgruntled former employee, had been offering to sell its secret manufacturing processes to third parties. 2002) is a classic example of using the statute to protect a victim company. The maximum penalty for violating the Economic Espionage Act is 15 years in prison, a $500,000 fine and a maximum corporate fine of $10 million.
The definition of trade secrets in the statute mirrors the broad definition in state trade secret laws to include “all forms and types of financial, business, scientific, technical, economic, or engineering information” that “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.” 18 U.S.C.
It can be used to protect a company’s valuable intellectual property by prosecuting dishonest competitors who steal a company’s trade secrets, but it can also be used against a company that finds itself with trade secrets belonging to a competitor.Ĭongress enacted the Economic Espionage Act in 1996 making it a federal crime to steal trade secrets. For corporate America, the Economic Espionage Act is a double-edge sword.
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