Triaging Trade Secret Theft

As the size, complexity, and interconnectedness of modern companies' IT infrastructures has increased, so too has the risk of corporate espionage and cyber attacks targeting companies' intellectual property. In-house and outside counsel must be ready to deal with the risk that their clients' confidential information will be stolen, potentially undermining the company's trade secret assets. Recently, DuPont's large share of the world's multi-billion-dollar-a-year titanium dioxide market was threatened by the alleged theft of its trade secret manufacturing techniques by overseas competitor Pangang Group. See United States v. Pangang Group Co. (N.D. Cal. Case No. 11-0573). Similarly, Chinese wind turbine manufacturer Sinovel was indicted this past June for misappropriation of trade secrets valued at $1 billion from Massachusetts-based energy company AMSC. See United States of America v. Sinovel Wind Group Co., Ltd. et al (W.D. Wis. Case No. 13-084). Theft of trade secrets can occur on a smaller scale as well. All it takes is an employee who unwittingly plugs a flash drive with spyware into a company computer, or a disgruntled IT staff member with access to sensitive databases.

Preventative measures abound, including hiring cyber security experts, removing USB ports from corporate computers, enforcing bring-your-own-device policies that govern the use of personal devices for work purposes, and requiring employees to use "clean" loaner laptops when traveling abroad. But what should counsel do when they learn that those measures have failed, and that trade secret information has already been stolen? Worse yet, what if it is discovered that the stolen information has been obtained by a competitor outside of the United States? Once a trade secret is out the door, preventing further dissemination or misappropriation will likely require litigation, and certain prudent options such as those outlined below should be considered.

Contact the Authorities

First, it is important to quickly determine who is in possession of the stolen trade secrets. If the identity of the culprit is not readily ascertainable, private forensics teams can be brought in. Government authorities can also be contacted. While the police are often ill-equipped to deal with cyber theft, the Secret Service Electronics Crimes Task Force has offices in most major US cities and can coordinate local and state law enforcement efforts. If a larger scale or cross-border theft is suspected...