When this occurs, the competition has what it needs to create the consumer base it needs to thrive as the original company did with the secret recipe, combination of ingredients or other secrets it possessed. While this may appear to be a corporate strategy to push ahead with customers, it is a crime. In some instances, it may be considered a federal crime with serious impact and penalties. The act of stealing these secrets is often enough to push the original place of business out of the market.
What is a Trade Secret?
A trade secret is often some device, technique, recipe or combination of factors that allows the company to create something original or different. The secret is usually only shared with those necessary to do the job for the business. When this involves food, the chef or baker may be given access to the secret in order to create the item in question. When a trade secret is involved in a company, it is regularly what drives consumers to the location for the goods. A customer base is then created upon the foundation of the secret, and word of mouth, as well as advertisement, spread the notion that the secret allows the company to formulate something better than the competition. In many instances, there is little or no competition when the secret is so different that competitors cannot recreate the same thing. This is often the case with something different such as electronics, software and items where you do not have to list the ingredients.
Trade Secret Lawsuits
When these undisclosed ingredients or techniques are stolen, the company or owner may file a lawsuit. This is usually what occurs due to the loss of business or the crippling of the company due to the discovery of how the technique is used or what is used to create something unique or different. Generally, these lawsuits are civil matters in a localized area. One plaintiff is charging a defendant with the theft. If the secret has not been disclosed to the public or another company, it is possible to mitigate the damage. That may save the business from customer loss and revenue plunges.
Certain instances may elevate the theft of trade secrets to the federal level of crimes. When these techniques or ingredients are stolen and smuggled to another country, the Economic Espionage Act of 1996 may be invoked as it is a federal crime to disclose trade secrets for the benefit of a foreign government. This also holds true if the thief personally benefits for the stolen secrets.
Economic Espionage Explained
There are some stipulations that govern the theft of trade secrets in regards to the Economic Espionage Act of 1996. These demand the stolen secrets to have been taken for any benefit of foreign governments, agencies or instrumental use of either. The person that stole these secrets must have had the intention or knew that his own actions would provide a benefit for some foreign government, agency or give an instrumental use of one or more foreign businesses. He or she did steal the technique or ingredient knowingly by either buying it, theft or possessing it with the intention of stealing it completely, taking it secretly, obtaining it in an unauthorized manner or converting the secret without permission. Another stipulation to be included with this act was that what was appropriated must be a trade secret.
The other section of this crime involves when the secret is misappropriated with the thief’s intention to convert it for his or her own benefit. This is anyone other than the owner. It could also be done to injure or harm the owner of the trade secret. This means it was taken or stolen with the sole purpose of benefiting anyone other than the original owner. The secret was given to the thief under false pretenses, purchased or possessed with the intention of converting it without permission of the person that created it or owned it or initially. The item, technique, ingredient or similar must have been a trade secret. The person that stole it did so with the intention or knowledge that the stolen secret would harm the owner. For these stipulations, the trade secret must be connected to or a component in a product produced with interstate commerce or sold with foreign companies.