1. Theft of Trade Secrets & Economic Espionage
Matt Parrella
Computer Hacking/Intellectual Property (CHIP) Unit Chief
Northern District of California
(408)

2. Theft of Trade Secrets & Economic Espionage
Theft of Trade Secrets (18 USC 1832) :
Prohibits theft, possession, alteration, etc of IP w/o owner’s authorization if:
The information is a trade secret
The defendant intended to convert the trade secret to the economic benefit of a non-owner
The defendant intended or knew that the owner would be injured
The trade secret was related to a product produced or intended for interstate or foreign commerce
Economic Espionage (18 USC 1831):
Includes element of intent to benefit foreign government, instrumentality, or agent

3. Trade Secret 18 USC 1839(3) Trade Secret defined as:
ALL forms and types of:
Business, scientific, technical, economic, or engineering information, including:
Patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes
Whether tangible or intangible, and
Whether or how stored, compiled, or memorialized
Physically, electronically, graphically, photographically, or in writing, if:

4. Trade Secret 18 USC 1839(3)
The owner has taken reasonable measures to keep such information secret, and
The information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means, by the public

5. Interests: LE v. Private
Law Enforcement:
National Security
Collect evidence
Prove elements (intent/knowledge)
Conviction/Sentence
Prevent Further Dissemination
Recover Stolen Info

6. Interests: LE v. Private
Private Industry:
Recover Stolen IP
Prevent Further Dissemination of IP
Control Public Information
Victim Co. Position w/in Industry

7. Advantages/Disadvantages of Criminal and Civil Process
Advantages of pursuing criminal process
Significantly enhanced investigation methods
Search warrants/GJ Subpoenas
Agent interviews of witnesses and suspects
Border searches
Arrest/incarceration of suspects
Ability to interact with international law enforcement agencies

8. Advantages/Disadvantages (continued)
A range of criminal statutes to pursue
Expertise of LE Agencies, forensic analysts, and DOJ
No onerous civil lawsuit requirements (written disclosure of trade secrets; delays in ability to conduct discovery; limitations of discovery mechanisms; depositions of client’s experts and employees, etc.)

9. Advantages/Disadvantages (continued)
Disadvantages of pursuing criminal process
-Loss of control over matter
-Risk that LE will not pursue
-No control over timing of events in the case
-No direct control over the ultimate case resolution
-Charging/Plea decisions need early valuation of TS’s
-Client commitment to case: people go to jail
-LE may publicize the case for deterrent purposes

10. Trade Secret Themes Prepare to be a Good Victim Trade Secret status:
Secrecy and Economic Benefit from same
Reasonable measures taken to keep secret
Value of TS
After theft:
Evidence collection (logs, s, employment agreements, NDAs, etc.)
Use of TS

11. Economic Espionage Case (U.S. v. Fei Ye, et al.)
First conviction in the nation under 18 USC 1831 – Economic Espionage:
defendants stole TSs relating to integrated circuit design from Sun Microsystems and Transmeta Corp.
Project, known as “Supervision,” to produce and sell microprocessors for benefit of PRC
admitted that their company had applied for funding from the National High Technology Research and Development Program of China, commonly known as the “863 Program.”
Some of the TSs seized from defendants at SFO
Defendants PG to 1831.

12. Theft of Trade Secrets Case (U.S. v. Woodard)
Defendant was IT Director at Lightwave Microsystems (LWM)
When LWM ceased operations, defendant stole the system backup tapes, which contained all proprietary IP
Defendant attempted to sell the tapes to LWM’s competitor
FBI alerted, UCO begun, resulting in defendant’s arrest and seizure of tapes
Defendant PG, sentenced to 24 months imprisonment, followed by 3 years supervised release.

13. Assistant United States Attorney
Matt Parrella
Assistant United States Attorney
Computer Hacking/Intellectual Property (CHIP) Unit Chief
United States Attorney’s Office
Northern District of California
(408)