Trade Secrets

Another context in which the mail and wire fraud statutes arise is in the realm of trade secrets. The common case involves an employee who relayed valuable data from a company he formerly worked with to a new employer. This is an area that highlights our earlier point about preemption – the Stolen Property Act reaches most of this specific type of activity, but contains a $5000 threshold value of the stolen trade secrets in order to bring a claim. However, prosecutors can get around this threshold requirement by going the wire fraud or mail fraud route, assuming the fraud was accomplished using a wire or mail. The focus in these cases is on the injury to the employer. The lead case on the topic characterized the theft of trade secrets as embezzlement, analogizing that the rogue employee deprived the employer of the exclusive possession of the confidential information. Such information must be either acquired or compiled by a corporation in the course and conduct of business, or generated from the business where the business has a right to decide how to use it before disclosing it to the public. Such information must have independent economic value or otherwise confer a commercial advantage, and the employer must take reasonable steps to maintain privacy. Further, the property must be in the victim employer’s possession at the time of the fraud. This is another area where judges will engage in policy-making, balancing the interest of protecting employers against the prospect of chilling employee mobility.