Tougher Penalties For Corporate Espionage: A New Model? – Intellectual Property

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Harsher Penalties for Industrial Espionage: A New Model?

June 24, 2021

Foley & Lardner

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In this divided political age, it is seldom that a legislature can agree on anything. It is even rarer to say goodbye to something unanimously. But the Florida Legislature found something ALL 145 members could agree on: the Florida Anti-Corporate Espionage Act. The law comes into force on October 1, 2021 and provides additional means of protecting trade secrets. This should generally be good news for employers, but it can also introduce some new risks as employers may face greater challenges based on information accompanying new employees.

Once the law comes into effect, it does the following:

1.) Increases the severity of the trade secret theft offense, increasing the potential sentence to five years in prison. (Theft of a trade secret is currently a third degree crime and that provision remains intact.)

2.) Modifies the definition of “trade secret” to include any type of storage (physical, electronic, written, etc.) that falls within the scope of a protectable secret. This change ensures protection for items that are stored “in the cloud”.

3.) Generates a New Punishment for anyone who traded trade secrets that he knew or should have known without authorization or tried to make them known. Since human trafficking is a second degree crime and a level five crime on the severity list, the sentence could be up to 15 years in prison.

4.) Increases penalties in any situation involving actors who intend to assist a foreign government, agent or entity. A person who steals or discloses trade secrets for these purposes will be classified as an “offense” by one degree. For example, a third degree crime for theft becomes a second degree crime. A second degree crime for human trafficking becomes a first degree crime, and so on. And the order of severity of the crime can also be increased.

While the specific criminal sanctions can be confusing, the law clearly shows the state’s will to crack down on corporate espionage. This could result in a former employee being charged with a crime for stealing the trade secret and the new employer being charged with a crime for obtaining the material, even if the material is not used.

As mentioned above, the penalties increase when a foreign actor or influence is involved. In practice, this means that workers must be extremely careful when removing information and employers must weigh the risk of criminal penalties when receiving information from a new employee. If this development intensifies litigation (or threats of litigation) against individuals changing business and their new employers, it can also reduce employment mobility.

It’s too early to say if Florida law is the start of a bigger trend. However, given the unanimous support of the Florida legislature, it is important to watch if and when other states take similar steps and how they can be used both for and against employers.

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.

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