New York Commercial Espionage Lawyer

Theft of trade secrets

Until relatively recent times, the theft of trade secrets had been considered a sort of business tort to be dealt with in civil court if the aggrieved party sued for monetary damages. Courts defined a trade secret as “any formula, pattern, device, or compilation of information which is used in one’s business, and which gives one an opportunity to obtain an advantage over competitors who do not know or use it”. While the patent provided some legal protection, this was not the case with non-patented technologies had no such protection.


Those days are long gone. Trade secret theft has not been treated as a criminal offense, in both federal and state justice systems. In New York, if theft of trade secrets is prosecuted in state courts, the larceny statute is normally used. In federal courts, the government is using several criminal statutes to prosecute commercial espionage and trade secrets theft.


Theft of Commercial Secrets Under The Federal Law

The National Stolen Property Act 18 U.S.C. ß 2314.

The statute, called “Transportation of stolen goods, securities, moneys, fraudulent State tax stamps, or articles used in counterfeiting,” addresses various schemes of transportation, transferring, or transmitting in interstate or foreign commerce any goods, wares, merchandise, securities or money if the person knows that they have been stolen, converted or taken by fraud. With the exception of certain financial instruments, this includes essentially anything of value of 5,000.00 or more.


Under this law, in order to convict, the federal prosecution must prove that there must have been a transportation in interstate or foreign commerce of goods, wares, merchandise, securities or money having a value of $5,000 or more, which have been stolen, converted, or taken by fraud. Federal courts have held that this includes trade secrets (including electronically stored data, hard copy documents, etc.,) which have been actually transported in interstate or foreign commerce.


There is a great degree of ambiguity what is and is not considered “goods, wares, or merchandize”, whether the statute is limited to tangible items or incudes the ideas as well, how it interacts with the criminal copyright law. This is why an expertise of a season federal defense attorney is critical in defending commercial espionage cases.


The government also must prove that the value of the stolen “goods, wares or merchandise” was at least $5,000. Depending on where the case is pending geographically, courts have been using various tests to determine whether the government has established that.

Finally, the prosecution must that the goods, wares, merchandise, securities, or money in question have been “stolen, converted, or taken by fraud” and that the defendant knew that. This is where opportunities for successful defense strategy may be. Was fraudulent conduct really involved? Was there any intent to defraud? There are many issues that may be used in one’s defense to demonstrate that the no fraud took place.


Federal Mail Fraud Statutes – 18 U.S.C. ß 1341.

Because the National Stolen Property Act contains numerous elements, which the prosecution must establish, the federal government often uses the federal mail fraud statute along with it in case it fails to establish all the elements. In this case, even if the defendant may be acquitted under the National Mail Fraud Statute, he or she may be still convicted of using the mails in furtherance of a scheme to defraud his employers of valuable trade secrets. The mail fraud statute is easier for the prosecution purposes because under it the government only needs to prove that the mails were used in furtherance of some fraud.


Trade Secret Theft Law In New York

It is very unlikely and rare to face criminal prosecution for the theft of trade secrets under New York state law. However, if local prosecutors want to bring these charges, they use New York grand larceny statute. In New York it is grand larceny in the fourth degree to steal secret scientific material. Under New York Penal Law ß 155.30: “A person is guilty of grand larceny in the fourth degree when he steals property and when … the property consists of secret scientific material.”

There is also a separate offense under the New York Penal Law, ß 165.07, which prohibits the unlawful use of secret scientific material. That statute addresses reproducing the secret material even if the original documents are never transferred.


Violations of the Federal Wiretap Law–18 U.S.C. ß 2511 for Commercial Purposes


One issue that commonly occurs in commercial espionage cases is illegal wiretapping. The US federal law contains a number of criminal statutes that address wiretapping in commercial cases. For example, title 18 U.S.C. ßß 2510-2520 contain the federal criminal sanctions against wiretapping. With very few exceptions, this statute prohibits all wiretapping and electronic surveillance by anyone except law enforcement officers, engaged in the investigation or prevention of specified types of serious crimes, and only after obtaining a court warrant.


In commercial espionage settings, federal wiretaps violations issues may arise in cases where employers spy on employees and vice versa as well as when businesses spy on competitors. Other examples include spying on political opponents, and even recording c0-conspirators in conspiracy to commit other crimes.


If you face commercial espionage or theft of trade secret charges, you need an experienced defense attorney. At Joseph Potashnik and Associates PC our New York based criminal attorneys have the experience and recourses to represent individuals investigated for or accused of commercial espionage. We have a track record of success representing clients in complex criminal litigation. In two recent cases, for example, we represented a computer programmer accused of stealing a code from his employer’s computer and attempting to sell it to a competitor. We also represented a government employee who was charged with accessing and stealing sensitive information from his work computer.

Defending a charge of commercial espionage requires a solid understanding of what it is the government claims was stolen. Commercial espionage cases often involve multiple jurisdictions, sometimes spanning between the United States and other countries. The statute is specifically designed to apply to conduct committed outside the United States but only if the offender is a citizen or permanent resident alien of the United States, or an U.S. registered business entity or the actual theft occurred in the United States.

If you need to discuss your case with an experienced New York criminal lawyer, contact our office today for a confidential evaluation of your case.