Facing Federal Theft of Trade Secrets Charges?

Under 18 U.S.C. § 1832, it is a federal crime to intentionally steal, copy, or knowingly receive a trade secret with intent to economically benefit anyone other than its rightful owner. This statute is frequently used to prosecute corporate espionage and rogue employees, carrying severe penalties.

Examples of Theft of Trade Secrets

• Departing Insider (Most Common): A manager at a specialized commercial cleaning company decides to quit and start their own competing business. Before leaving, they secretly email themselves their employer’s master database. This isn't just a phonebook; it contains private notes on exactly what each client is willing to pay, their specific cleaning needs, and when their current contracts expire. The manager uses this hidden information to undercut their old boss and poach the clients.

• The "Next Big Thing" Leak: A worker at a toy company is part of a restricted team developing a highly anticipated, top-secret toy for the upcoming holiday season. Knowing a rival company would love to see it, the worker snaps photos of the final designs and the manufacturing instructions, sending them to the competitor in exchange for a cash payout. This allows the rival to manufacture a knock-off and beat the original creators to the market.
• Selling the Secret Formula: A lab assistant at a cosmetics brand has restricted access to the exact, unreleased formula for a revolutionary new skincare cream. Upset about being passed over for a promotion, they download the formula onto a personal hard drive and reach out to an overseas manufacturer, offering to sell the exact chemical mixture for a flat fee so the manufacturer can produce cheap imitations.

What Federal Prosecutors Must Prove

For the Government to obtain a conviction, federal prosecutors must first prove beyond a reasonable doubt that the defendant knowingly stole, copied, duplicated, or received a trade secret without the owner’s authorization.

Prosecutors must also establish that the defendant acted with the intent to convert the trade secret to the economic benefit of someone other than the rightful owner. The government must show the defendant knew or had reasonable understanding that the information qualified as a trade secret—meaning the owner of the protected information had gone to great lengths in shielding the secret from the public or competitors.

Finally, the trade secret must be related to a product or service used in, or intended for use in, interstate or foreign commerce, which is the federal jurisdictional hook.  

How Federal Trade Secret Cases are Prosecuted

While many trade secrets disputes are handled privately in civil courts, the most egregious thefts cross over into criminal territory. When this happens, the U.S. Department of Justice (DOJ) and the FBI step in.

The Trigger and Investigation

1. Initial Report: The process almost always begins when a victim company discovers a theft and formally refers the matter to the FBI or a local U.S. Attorney’s Office.
2. Looking for the “Plus Factor”: The federal government does not have the resources to prosecute every rogue employee. Prosecutors look for aggravating factors to justify a criminal case, such as a massive economic impact, a prominent victim, or a connection to a foreign government. 

Indictment and Protective Orders

3. Grand Jury: Once the investigation yields strong evidence, the prosecutor presents the case to a grand jury to secure an indictment.
4. Secrecy: A massive fear for a victim company is that their secret will be exposed to the public during a trial. To protect trade secrets, courts utilize Protective Orders. These act as strict confidentiality agreements that seal court documents and limit who can view the evidence, ensuring the secret stays safe throughout the litigation.

Trial, Conviction, and Penalties

5. The Trial: As In any criminal case, the burden is entirely on the government. Prosecutors must prove all the required legal elements beyond a reasonable doubt.
6. The Consequences: If convicted, a federal judge determines the sentence based off sentencing guidelines. For a person charged with Theft of Trade Secrets, this can lead to a sentence of up to 10 years in federal prison and a $250,000 fine. The Government will also enact criminal forfeiture, seizing any money, property, or profits gained from the stolen information.

Potential Defense Strategies

Challenging the “Trade Secret” Status

The most straightforward defense is proving that the information in question is not a trade secret. An experienced lawyer will heavily scrutinize the victim company’s security practices. If the company failed to use Non-Disclosure Agreements (NDAs), left the data on an unsecured server, or if the information is already general knowledge within the industry, the defense will argue it wasn't a trade secret at all. If the owner didn't protect it, it's not a crime to take it.

Independent Creation or Reverse Engineering 

Trade secret law does not give a company an absolute monopoly over an idea (unlike a patent). It is perfectly legal for a competitor to figure out the secret through fair and honest means. If a defense attorney can prove that the defendant independently developed the same code, formula, or business strategy on their own—or legally purchased the product and reverse-engineered it without breaking any contracts, then no theft occurred.

Possible Sentencing & Penalties

• Prison Time: Up to 10 years in federal prison per count.
• Fines: A fine of up to $250,000, or up to twice the gross financial gain or loss resulting from the offense (whichever is greater).
• Criminal Forfeiture: Under 18 U.S.C. § 1834, the government will seize any property, proceeds, or financial profits the defendant derived from the crime, as well as any equipment (like servers or computers) used to commit the offense.
• Restitution: Federal judges are generally required to order defendants to pay direct financial restitution to the victim company to compensate for the actual economic damages caused by the theft. 

Examples and Related Cases

One recent case drawing attention under 18 U.S.C. § 1832 (the federal theft of trade secrets statute) involved Haoyang Yu, a former employee of Analog Devices, Inc. Federal prosecutors alleged that Yu retained and used proprietary semiconductor information after leaving the company and later marketed competing microchips.

A jury ultimately convicted him on a count of unlawful possession of a trade secret in violation of § 1832(a)(3), while other charges—including wire fraud and export-related offenses—did not result in convictions. On appeal, Yu argued that the prosecution was selectively targeted and challenged whether the government had sufficiently proven the trade-secret elements, making the case a notable recent example of the government's continued use of § 1832 in technology and semiconductor-related prosecutions.

Your Defense Begins Now

You're not a case number. You're a person facing the full weight of the federal government, they're counting on you to feel overwhelmed, isolated, and out of options. Don't give them that. 

When you retain The Law Offices of Jason Goldman, you don't just hire a lawyer — you secure a team of skilled and relentless advocates who will stand between you and the government at every turn, fight for every inch, and never stop until we dismantle their case against you.

‍Contact us for a confidential consultation because you deserve someone in your corner who fights as hard as the stakes demand.