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Believe It or Not: The U.S. Attorney and the F.B.I. Can Now Help You Recover Your Client's Misappropriated Confidential Information

Date: 4/15/08

Nick AlexanderBusinesses have long recognized that former disgruntled employees and even competitors often misappropriate their critical proprietary information such as customer data, software, proprietary business plans and other information, with little or no consequence. However, recent changes in federal law now allow businesses to ask the U.S. Attorney and the F.B.I. to commence a criminal investigation and to recover their trade secrets.

Civil litigation is costly, slow, and uncertain, while conventional wisdom discourages reporting such conduct to the Feds. However, the legal landscape is changing. In 1996, Congress passed the Economic Espionage Act (“EEA”) which made it a federal crime to misappropriate trade secrets and take them across state lines (if the violator knew that the owner would be economically injured, and if the trade secrets were to be converted for the benefit of another). Although the EEA does not allow for a private cause of action (a civil law suit) the Act does empower the United States Attorney’s Office to prosecute those who misappropriate and steal trade secrets. In 2004, Congress passed the Crime Victims Rights Act (“CVRA”) which allows victims -- including businesses and corporations -- to obtain information concerning the status of the Government’s case. Under the CVRA, corporate victims can obtain information concerning certain actions and procedures the Government is taking in response to reports that a theft of trade secrets has taken place. Also, the United States’ F.B.I. Cyber Division has obtained increasingly greater resources in recent years for the investigation of computer related crimes. Most all misappropriation of trade secrets involves the use of a computer in one way or another, and hence, these cases are appropriate for the F.B.I. Cyber Division and their expanded budget.

The law in this area is still developing and many lawyers are just beginning to learn about this area of the law. One needs to be familiar with the recent statutes, regulations and the public policies in order to exercise rights in this area of law. There are also ethical concerns in seeking an investigation as well. But it is important to realize that intellectual property, including even very pedestrian or everyday trade secret materials, are now the focus of certain federal laws and are protected by federal agencies. Where a business has proprietary confidential information -- information which provides a business with an advantage in the marketplace, the specifics of which the rest of the industry is not aware, and which the company created itself and continues to protect as its own trade secret -- the misappropriation of that information may well provide the basis for a criminal investigation.

As our economy becomes more of an information-based economy, intellectual property, and trade secrets take on greater importance, and this is reflected in changing federal laws.

Article By:
Nicholas P. Alexander, Attorney
Morrison Mahoney LLP

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