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A Cautionary Tale About Trade Secret Theft

Published by on July 14, 2008

The Wall Street Journal Law Blog has a cautionary tale today about an executive who has pled guilty to trade secret theft in California.  The post is here. Apparently the executive sent an email to two competitors with an attachment containing his employer’s trade secrets.  He faces a maximum of 10 years in prison, a $250,000 fine […]

The Wall Street Journal Law Blog has a cautionary tale today about an executive who has pled guilty to trade secret theft in California.  The post is here.

Apparently the executive sent an email to two competitors with an attachment containing his employer’s trade secrets.  He faces a maximum of 10 years in prison, a $250,000 fine and three years of supervised release.  The quote from his attorney suggests that the information was transmitted as part of a job search.

I was involved in a trial several years ago with an employee who had engaged in similar conduct.  As part of his efforts to obtain employment with another company, the employee transmitted financial data to the prospective employer to show what income he would be able to bring with him should they offer him a position.  A jury found the disclosure a breach of fiduciary duty and also a breach of the duty of loyalty to his employer.

The WSJ Blog story is an important lesson to anyone considering sharing their employer’s trade secrets with a prospective employer.  If having to face a civil lawsuit from the employer is not a sufficient deterrent to doing so, perhaps the fact that it is a federal crime to misappropriate trade secrets will do so.

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