Theft of Trade Secrets in California

What Is Theft of Trade Secrets Under California Criminal Law?

Theft of Trade Secrets in California

Imagine a spy film from the 1960s. A young agent is bustling down a crowded sidewalk, looking over her shoulder as she carries a black leather briefcase full of secret documents. When you think about trade secret theft, this may be the image that comes to mind.

The California trade secrets law’s reality is a lot more complex (and a little less exciting).

It can be broken down into three key elements:

  1. The meaning of a “trade secret” under the law
  2. The meaning of “theft” under the law
  3. The prohibition on selling trade secrets by an unauthorized person

What Is a “Trade Secret” Under California Criminal Law?

A simple example of a trade secret would be a specific formula for producing a chemical. More complex examples could include a method for efficiently scheduling employees for work shifts or cutting fabric quickly.

All trade secrets have two general characteristics:

  • The information is valuable because it’s not known to the general public.
  • The information has been purposely kept a secret by the owner.

Value Through Secrecy

For information to qualify as a trade secret, it must be economically valuable because it is not known by the general public or others who could use it to make money. The recipe for a grilled cheese sandwich is not a trade secret because it’s common knowledge. However, a secret method for making the best grilled cheese sandwiches to sell at a profit might be.

Reasonable Efforts by the Owner To Keep It a Secret

To qualify as a trade secret, the owner of the information must have taken steps that were “reasonable under the circumstances” to maintain its secrecy. This could include telling employees about the secret only on a “need to know” basis and generally not making information about it publicly available.

What Is a “Theft” Under the California Trade Secrets Law?

Theft of trade secrets requires both the intent to steal a trade secret from its owner and an action that carries out that intent.

Intent

This means that you purposely took the trade secret to use for yourself, sell to someone else, or prevent the owner from using it.

Actions

The action taken can be physically stealing and taking away a trade secret, as with the classic black spy briefcase full of documents. But it can also be gaining access to a trade secret by lying, copying a trade secret without prior permission, or copying the secret after you’ve promised to keep it a secret.

Is Selling Trade Secrets Without Authorization Illegal?

Yes. California law also prohibits the unauthorized sale or purchase of trade secrets. An employee of a trade secret owner may not “promise, offer, or give” a trade secret to anyone not authorized by the owner to receive it.

However, for this separate charge to apply, the trade secret must be given in exchange for some kind of benefit, bribe, or reward. Even if money isn’t exchanged, a benefit exchange could occur if you were offered a job at a competing company for stealing the trade secret. It’s also illegal to offer to buy a trade secret if you know the seller isn’t authorized by their employer to sell it.

Possible Penalties

A conviction for the theft of trade secrets carries a maximum penalty of 3 years in prison and a $5,000 fine.

If you’ve been arrested for theft of trade secrets in Orange County, CA, a skilled criminal attorney can help you understand the charges against you and present a strong defense on your behalf.

At the Chambers Law Firm, we aggressively advocate for all of our clients and work hard to help them achieve the best possible outcome in each and every case. To learn more or to schedule a free consultation with a member of our team, contact us today at 714-760-4088 or dchambers@clfca.com.

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