Thursday, January 23, 2014

Federal conviction for trade secret theft? A comment on Nosal by Karl Manheim and Jeffery Atik

Stealing a trade secret (reprehensible though this may be) has generally not attracted federal criminal liability. Yet in the recent prosecution of David Nosal, the Justice Department applied a computer hacking statute to convict a departing employee for a rather run-of-the-mill trade secret theft: the unauthorized taking of customer lists. Many if not most trade secrets -- like the customer lists involved in Nosal -- are stored on computers. As such, aggressive use of the federal Computer Fraud and Abuse Act could convert many trade secret misappropriations -- traditionally civil offenses and a state law matter -- into federal crimes. And this policy shift -- criminalizing and federalizing -- results from the determinations of prosecutors and judges, and not from Congress.

For more of this comment, see Theft of Trade Secrets Brings Federal Conviction on Loyola Law School's faculty blog, Summary Judgments.

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