Defending Criminal Theft of Trade Secret Cases

When we think about trade secret litigation, we think about it in the civil and commercial context. But that overlooks the growing trend of criminal trade secret prosecutions. Consider this a timely post: Florida just passed the Combating Corporate Espionage in Florida Act, which updates and amends the previous criminal laws regarding trade secret misappropriation. I’m going to discuss

Florida’s Culture of Frivolous Trade Secret Lawsuits 

Florida already has a problem with companies pursuing bad faith trade secret cases. Every single day in Florida, companies file trade secret lawsuits where anybody with an internet connection can find the supposed “trade secrets” on Google in less than 10 minutes. Companies in Florida do this to lock up talent, restrict employee mobility, intimidate competitors, and gain a competitive advantage in the market. Filing frivolous trade secret cases against competitors is a classic raising rivals’ costs (RRC) strategy.

An employee leaves Company A and goes to Company B. In California or New York, that happens thousands of times every day and nobody bats an eye. In Florida, anytime an employee leaves a company and goes to work for a competitor, there’s a risk of litigation. Why? I could write 100 pages to answer that. But the shorthand is this: Over the past 30 years, Florida has created a culture where (a) employees are basically corporate property; (b) employee mobility is considered a bad thing; (c) non-compete agreements are normalized (crazy for a restraint of trade that used to be the exception, not the rule); (d) corporations hold far too much power and influence; (e) courts rarely sanction corporate plaintiffs for frivolous non-compete or trade secret litigation; and (f) non-compete and trade secret litigation is big business for corporate lawyers. Finally, for the mind-blowing, Jonathan Pollard is just a crazy person angle: Florida is a former slave state. And the remnants of that way of thinking (people as property) color this area of Florida law.

So we start here: Companies in Florida file bad faith theft of trade secret lawsuits all the time. They do this to gain a competitive advantage and to eliminate competitive threats. They rarely if ever face any consequences for doing this.

Florida Companies Pursuing Criminal Trade Secret Cases 

If Company A is willing to pursue a frivolous civil lawsuit for theft of trade secrets, what’s to stop them from pursuing criminal charges? Nothing. Pursuing a civil trade secret case requires money. Even with a lower cost attorney or firm, it’s hard to imagine a plaintiff spending anything less than $100,000 to take a trade secret case to trial (it’s usually much more). But if the Plaintiff has the right connections (to the prosecutor, state attorney, various politicians), they might be able to convince the State to pursue criminal charges. Let’s be real: Sometimes the authorities pursue criminal charges for legitimate reasons. Other times, the authorities pursue criminal charges for political reasons. So the right corporate plaintiff probably has a good chance of getting some prosecutor to pursue criminal trade secret charges. And if that happens, the plaintiff now has even more leverage. Not only is the defendant faced with a civil trade secret lawsuit, attorneys’ fees, and the prospect of economic ruin— they’re also facing the threat of jail time. Don’t doubt for one second that some companies in America (and especially in Florida) will pursue criminal theft of trade secret charges to gain leverage— even where there are no actual trade secrets at issue.

Defending Criminal Trade Secret Cases: Strategic Considerations

I’m not a criminal defense lawyer. I litigate non-compete and trade secret cases (almost always on the defense side). So keep that in mind as you consider the following:

1. You need both a criminal defense lawyer and a trade secret lawyer. Unless you happen to find that rare attorney who has expertise in both criminal defense and trade secret law, you probably need both. Yes, that’s a huge investment. But we are talking about prison. And the most recent amendments to Florida law create the offense of “trafficking in stolen trade secrets.” That carries up to fifteen (15) years in jail.
2. You need to mount a full-blown trade secret defense. It’s not enough to focus on the more traditional criminal defenses. Yes, you definitely raise those. But you have to attack the trade secret claim/charges on the merits. If we’re dealing with a top secret robotics technology? Yes, there’s a reasonable chance that is a trade secret. But that’s not what most of the trade secrets cases in Florida are about. Most of the trade secret cases in Florida are about “customer lists”— where anyone can find the customers on Google or LinkedIn. Or, they are about generic and unspecified “methods”, “processes”, or “strategic plans.” The plaintiff can’t actually articulate what it is, but they swear up and down that it’s a trade secret. I wish more judges dismissed cases with those sorts of boilerplate allegations and sanctioned the corporate plaintiffs who filed those sorts of lawsuits. Maybe someday. But for now, plaintiffs who pursue that sort of boilerplate trade secret case get way too much leeway, especially in state court. On the criminal side, I have a reasonable hope that it is different.
3. Attack intent. I’ve seen dozens of trade secret cases where the defendant took something or emailed himself something but with no ill intent. The defendant took a document because he brought a list of customers to the company, grew that list, and thought that expanded list was still his. Or the defendant emailed himself some documents to prove what commissions or bonus compensation he was due. Or the defendant emailed something to a personal email account because of problems with the corporate email server. All of these scenarios suggest a lack of intent.
4. Attack the burden of proof. In the civil context, the burden of proof is almost always “a preponderance of the evidence”. That basically means that if 51% of the evidence cuts in the plaintiff’s favor, the plaintiff wins. But in the criminal context, the burden of proof is (as we all know) “beyond a reasonable doubt.” Most scholars who have studied the issue define that standard as 90% or 95% certain. So as you can see, there is a massive difference between the evidence necessary to convict someone of theft of trade secrets in the civil vs criminal contexts.

Jonathan Pollard is a Florida attorney who litigates complex and high stakes non-compete and trade secret cases. He has appeared in or on The New York Times, Wall Street Journal, PBS NewsHour, Law360, Litigation Commentary & Review, IP WatchDog, Inc. Magazine and more. His Fort Lauderdale office can be reached at 954-332-2380.