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By Sanjeev Kumar
Founding Attorney

What are the penalties for theft of trade secrets?

One current employee and five former employees of Fitbit, Inc. have been charged by U.S. prosecutors for theft of trade secrets. The indictment alleges that the six Fitbit employees received stolen trade secrets when they left their employment at rival company Jawbone. Both Fitbit and Jawbone make fitness tracking devices. Fitbit has publicly stated that its employees did not misappropriate the Jawbone trade secrets, and the information was not used in any Fitbit product.

Protecting Your Trade Secrets

Every business has its own trade secrets, and trade secrets are often highly valued property. Trade secrets can encompass formulas, methods, processes, techniques, information, and other unique aspects of a company that has commercial value and which the business makes efforts to protect. Examples of trade secrets include customer lists, pricing lists, software programs, recipes, and the like. When you think about your operations, things that would be valuable to competitors are likely trade secrets.

Protecting trade secrets is of critical importance for any business and can be accomplished with the help of a trade secrets lawyer. Employers can minimize employee access to trade secrets by keeping trade secrets in a locked file cabinet or limiting access to electronic files. Employers should have employees sign a nondisclosure agreement that prevents them from disclosing confidential information both during and after their employment.

Penalties for Theft of Trade Secrets

Theft of trade secrets can have both civil and criminal penalties. On the civil side, all states have a law prohibiting the theft of trade secrets. A trade secret owner can file a civil action requesting that the court halts the use of the secrets or further disclosure with an injunction. The trade secret owner can also seek damages for all economic losses suffered due to the theft of trade secrets.

The intentional theft of trade secrets, or intellectual property, is a federal and state crime. Under federal law, an employee who steals trade secrets could be sent to prison for up to ten years and face fines of up to $500,000 for individuals or $5 million for corporations. Theft of trade secrets is considered a serious crime that could cost the wrongdoer his or her career, freedom, and significant earnings.

About the Author
Sanjeev Kumar is the founder and principal at the Kumar Law Firm, which provides a wide range of legal services to entrepreneurs and business owners in the area of business & corporate law and intellectual property along with related areas of interest to clients such as business succession planning, wealth preservation through estate planning, and alternate dispute resolution.