California Penal Code Section 499(c) PC: Theft Of Trade Secrets

1. Definition and Elements of the Crimetrade secrets theft

Many businesses and corporations rely on the ability to maintain trade secrets in order to keep their competitive edge in the market. Exposure of these secrets could ultimately destroy many successful companies, especially those in high-tech markets. As a result, theft of trade secrets is a serious felony offense under California Penal Code Section 499c PC that can result in lengthy prison sentences for those convicted.

In order to prove that a defendant is guilty of stealing trade secrets, a prosecutor must be able to establish the following:

  1. The defendant stole, took, carried away, or used without authorization, a trade secret

  2. OR the defendant fraudulently appropriated an article representing a trade secret entrusted to him or her

  3. OR the defendant unlawfully obtained access to an article and, without authority, made or caused to be made a copy of an article representing a trade secret.

  4. OR the defendant obtained access to an article through a relationship of trust and confidence and, without authority and in breach of the obligations created by that relationship, made or caused to be made, directly from and in the presence of the article, a copy of the article representing a trade secret.

  5. AND the defendant intended to deprive or withhold the control of a trade secret from its owner.

  6. OR The defendant intended to appropriate a trade secret to his or her own use or to the use of another.

A “trade secret” is defined as information, including a formula, pattern, compilation, program, device, method, technique, or process that:

  1. Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use

  2. AND is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
2. Related Offenses

Similar offenses include the following:

  1. Embezzlement - California Penal Code Section 503 PC
3. Examples

A man works for a soda company that carefully guards the secret formula of its bestselling cola. The man has access to the company’s computer files, including a copy of the formula for the cola. The man thinks he will be fired soon, so he makes a copy of his work hard drive which includes the secret formula and moves this information to a personal thumb drive. The man could be charged with theft of trade secrets in violation of California Penal Code Section 499c PC, as the secret formula would qualify as a trade secret under the statute.

In another example, a man works as a high level executive at a large corporation. Through his work, the man studies the organizational structure of the company, which he feels is a large part of the corporation’s high level of success. The man decides to leave his job and start his own competing company. The man implements much of the organizational structures from his former employer in his new company. While the man may have violated a non-compete agreement with his former employer, he would not be criminally liable for theft of trade secrets, as information such as a company’s general organizational structure is not something that would be considered a trade secret under the statute.

4. Defenses to Theft of Trade Secrets

As described above, if the information at issue is not something that would be considered a trade secret as defined by the statute, a defendant would not be guilty of this offense. In addition, there may be circumstances where a company whistleblower would acquire information that would be considered trade secrets, such as where a whistleblower gathers evidence that his company’s products are unsafe for public consumption. In these instances, the whistleblower would likely be immune from criminal prosecution for stealing trade secrets.

5. Penalties

Theft of trade secrets is a felony level offense that is punishable by up to three years in prison. In addition, someone convicted of this offense may have to pay restitution for any damage caused as a result of the theft.

6. Criminal Defense for Theft of Trade Secrets

If you have been charged with theft of trade secrets, it is crucial that you consult with a Los Angeles Criminal Defense Attorney right away. As a former Deputy District Attorney with over 14 years of prosecutorial experience, including an assignment to the elite Major Fraud Division of the Los Angeles County District Attorney’s Office, Los Angeles Criminal Defense Attorney Michael Kraut is highly skilled at handling white collar offenses such as this.

For more information about theft of trade secrets, and to schedule your free consultation, contact Los Angeles Criminal Defense Lawyer Michael Kraut at the Kraut Law Group located at 6255 Sunset Boulevard, Suite 1480, Los Angeles, CA 90028. Mr. Kraut can be reached 24/7 at 888-334-6344 or 323-464-6453.

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