The theft of trade secrets can be punished by both the criminal and civil justice systems in Texas.  Whether a criminal prosecution, civil suit, or both is appropriate depends upon the quality and quantity of the evidence, the amount of the loss, and the desires of the harmed party.

Criminal Proceedings for Theft of Trade Secrets

Theft of trade secrets is punishable under both Texas and federal criminal law.  Under Texas law, a conviction for theft of trade secrets carries a range of punishment from two to ten years in prison and a fine of up to $10,000.  Under federal law, a conviction carries a maximum punishment of up to ten years in prison for individuals and fines of up to $5,000,000 for organizations.  Other criminal statutes (e.g. wire fraud) may also apply to the prosecution of a theft of trade secrets depending upon the circumstances of the offense.

Whether law enforcement chooses to investigate and ultimately prosecute a theft of trade secrets depends largely on the quality and quantity of the evidence that a crime occurred.  Evidence that law enforcement will consider includes:

  • Evidence that the information is a “trade secret”
    • The degree of measures taken to protect information are correlated to how likely a court is to recognize the information as a “trade secret”. Courts may consider factors including how the information is stored, limitation on access to the information, and the security measures taken to protect the information in determining whether information is a trade secret.
  • Evidence demonstrating that the trade secret was stolen, acquired, duplicated, etc.
    • Evidence that a suspect copied, acquired, or otherwise unlawfully used a trade secret is essential to proving a theft of trade secrets. This evidence is commonly in the form of electronic and paper records, statements by the suspect or others with whom the suspect has dealt, and preserved e-mail.
  • Evidence that the trade secret has been used by another person or entity
    • Demonstrating that a competitor used a stolen trade secret is not a requirement under state law, but is useful circumstantial evidence of a theft. Moreover, proof that a stolen trade secret was used by a competitor demonstrates harm, which may help attract the attention of law enforcement.  Under federal law, the government must prove that a defendant used a trade secret “to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret”.
© 2021 David A. Nachtigall, Attorney at Law, PLLC