THEFT OF TRADE SECRETS IS NOW A RICO VIOLATION

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Congress has expanded the list of federal crimes that are forms of “racketeering activity” and can thus be the basis of criminal or civil RICO actions. The new additions are the “theft” of “trade secrets” which affect interstate commerce (and the latter is very easy to establish), a crime that had been on the books since 1996 and is codified at 18 U.S.C. 1832. But now this is a RICO offense meaning anyone engaging in a pattern of such thefts, or even one if it is part of a larger pattern of RICO violations, can be sued in federal court and be subject to treble damages for the offense. Trade secret protection has largely been, and still is, a creature of state law. There is even a Uniform Trade Secret Protection Act which has been adopted by most states.

But Congress in its wisdom wants to intrude, and give people an incentive to make a federal RICO case out of such activity. Federal judges are quick to complain about the federalization (shift from state to federal courts) of “garden variety” commercial disputes. They should write their members of Congress and not lecture plaintiffs’ lawyers who are using the law as it was intended to be used. Congress clearly wants to increase the work load of the federal judiciary in passing this expansion of RICO just as it has done dozens of times over the years to add foreign terrorism-related crimes to RICO, immigration violations, and money laundering-related offenses to the law. For a host of reasons, Congress doesn’t trust the states to handle these areas adequately.

The recent law also added 18 U.S.C. 1831 as a RICO violation. This is a companion to 1832 and makes the theft of trade secrets to help a foreign country or “agent,” a crime. It seems to be directed against people who have ties to foreign countries and use them to benefit them or their state-owned industries. China comes immediately to mind because it has allegedly been behind big data breaches of U.S. companies, particularly, Sony, in recent years. But the law, like all laws, is written in vague language, and can apply to situations well-beyond whatever particular situation the drafters envisioned.

These are significant expansions of RICO and creative plaintiffs lawyers will soon be bringing civil actions for the theft of trade secrets, particularly by hacking.