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Trade secret theft is both a state and federal crime

On Behalf of | Oct 4, 2023 | Criminal Defense, Federal Crimes

The recipe for Coca-Cola’s syrup. KFC’s 11 secret herbs and spices. WD-40’s formulation. The algorithm to Google’s search engine. The New York Times’ methodology to pick a book for its bestseller list. What do these things have in common?

They’re all trade secrets, giving their owners a unique competitive advantage against similar businesses. Unlike patents, there aren’t any time limits on the ownership and rights to a trade secret, which makes them valuable business assets.

However, some may be tempted to divulge these trade secrets for various reasons. Perhaps an insider wants to sell their company’s trade secret to competitors. Or an overly curious hacker hits the computer systems of a mega-corporation to uncover confidential business information.

Regardless of the reason or the method, stealing trade secrets is a crime on both the state and federal levels. Some of the harshest punishments await those who break the law.

Texas law on trade secret theft

Per state law, stealing, making a copy of, or communicating a trade secret without the owner’s consent is illegal. The offense is a felony of the third degree, and anyone convicted of the crime must pay as much as $10,000 in fines and serve up to 10 years in prison.

Federal law on trade secret theft

Meanwhile, the U.S. Code states that anyone who steals, misappropriates, duplicates, photographs, alters, destroys, receives or buys trade secrets knowing that the information is stolen, is committing a federal criminal offense. It’s also a crime to conspire with others to commit such offenses.

Those who are convicted of this offense will be heavily fined and ordered to serve a maximum 10-year prison sentence. Organizations that commit trade secret theft offenses must pay as much as $5,000,000 in fines, or three times the value of the stolen information.

While trade secrets invite speculation and can be fun mysteries to ponder, trying to divulge them without the owner’s consent is a crime. Those charged with this type of offense shouldn’t underestimate the strict penalties that await them.