Trade Secret Theft & Economic Espionage Defense

By Elizabeth Franklin-Best, Esq., and Christopher Zoukis, JD, MBA

Trade secret theft cases often grow out of an ordinary event — an employee changes jobs, starts a competing venture, or leaves with files on a laptop. What begins as a civil dispute between a company and a former employee can become a federal criminal case, with prison exposure and forfeiture at stake. If you are accused of taking, using, or receiving proprietary information, a trade secret theft lawyer should examine, early, whether the information was a trade secret at all and whether the government can prove criminal intent.

Our firm, Elizabeth Franklin-Best, P.C., is a federal criminal defense and appellate practice, and we defend trade secret theft and economic espionage charges across the country. Elizabeth Franklin-Best appears exclusively in federal courts and agencies, and the 2026 edition of Best Lawyers in America recognizes her as a “Best Lawyer” in Appellate Practice. These cases turn on precise definitions and intent, and we defend them by holding the government to both.

This guide explains what federal trade secret theft is, the statutes that define it, what prosecutors must prove, the penalties involved, and how a defense is built. It is general legal information, not legal advice. If you are under investigation or charged, we offer a paid, one-hour initial consultation to review your situation. This guide sits within our white-collar crime defense practice.

Quick Answer

Question	Answer
What is trade secret theft?	Stealing, copying, or receiving a trade secret without authorization, intending to benefit someone other than the owner and to injure the owner.
What law makes it a crime?	The Economic Espionage Act — 18 U.S.C. § 1832 (theft of trade secrets) and § 1831 (economic espionage to benefit a foreign government).
What is a trade secret?	Information the owner took reasonable measures to keep secret, and that derives independent economic value from not being generally known.
What penalties can apply?	Up to 10 years for theft of trade secrets, and up to 15 years for economic espionage, plus fines and forfeiture.
What does an initial consultation cost?	One paid hour with our firm, reviewing the accusation and the realistic defenses.

Key Takeaways

• Federal trade secret crimes come from the Economic Espionage Act — § 1832 for theft of trade secrets and § 1831 for economic espionage.
• Not all confidential business information is a trade secret. The owner must have taken reasonable measures to protect it, and it must derive value from secrecy.
• An employee’s general skill, knowledge, and experience are not trade secrets, even though they were developed on the job.
• The crime requires intent — to convert the secret to someone else’s benefit and to injure the owner; honest mistakes and good-faith disputes are not crimes.
• Economic espionage under § 1831 adds a further element: intent or knowledge that the theft will benefit a foreign government, instrumentality, or agent.
• Reverse engineering and independent development are lawful — they are not trade secret theft.

What Is Trade Secret Theft?

Federal trade secret theft is the unauthorized taking, copying, or receipt of a trade secret, done with the intent to benefit someone other than its owner. It is the criminal counterpart to what civil law calls trade secret misappropriation. The same conduct can give rise to both — a company can sue a former employee for misappropriation while the government separately pursues a criminal case — but the criminal version requires more, including proof of criminal intent beyond a reasonable doubt.

These cases most often arise in the employment context. An employee leaves to join a competitor or to launch a startup, and the former employer discovers that files, designs, source code, customer data, or formulas left with them. Whether that is a crime, a civil dispute, or nothing at all depends on two questions that a defense examines closely: was the information actually a trade secret, and did the person act with the criminal intent the statute demands.

The Economic Espionage Act: Sections 1831 and 1832

The Economic Espionage Act of 1996 created two distinct federal trade secret crimes:

• 18 U.S.C. § 1832 — theft of trade secrets. This is the ordinary commercial offense: stealing a trade secret related to a product or service used in interstate or foreign commerce, intending to convert it to the economic benefit of someone other than the owner, and intending or knowing that the theft will injure the owner.
• 18 U.S.C. § 1831 — economic espionage. This is the more serious offense, reserved for trade secret theft committed with the intent or knowledge that it will benefit a foreign government, a foreign instrumentality, or a foreign agent.

The distinction matters. Section 1832 punishes conventional commercial theft of trade secrets; § 1831 targets theft that serves a foreign state and carries a higher maximum sentence. Both reach not only completed theft but also attempt and conspiracy. When the proprietary information is taken from a company computer, the government also frequently adds a Computer Fraud and Abuse Act count.

What Counts as a Trade Secret

The entire case can turn on whether the information at issue is legally a trade secret. The statute defines the term broadly in coverage — it includes financial, business, scientific, technical, economic, and engineering information of all kinds — but it then imposes two firm requirements. The information qualifies as a trade secret only if:

• The owner took reasonable measures to keep it secret. If the information was shared freely, left unprotected, or not meaningfully guarded, it may not qualify.
• It derives independent economic value from being secret. The value must come from the fact that it is not generally known and not readily ascertainable through proper means.

Those requirements exclude a great deal. Information that is publicly available, that can be readily reverse-engineered, or that an employee carries in their head as general skill and experience is not a trade secret. The line between protected proprietary information and an employee’s own know-how is one of the most important — and most contested — issues in these cases.

Applied insight. Companies routinely label far more than the law protects. A “confidential” stamp does not make information a trade secret. If the owner did not actually guard the information, or if it could be pieced together from public sources, the prosecution’s foundation can give way before intent is ever reached.

What the Government Must Prove

To convict of theft of trade secrets under § 1832, the government must prove beyond a reasonable doubt that:

• A trade secret existed — information meeting the statutory definition.
• The defendant knew it was proprietary — that the information was a trade secret owned by someone else.
• The defendant took, copied, or received it without authorization.
• The defendant intended to convert it to the economic benefit of someone other than the owner.
• The defendant intended or knew the theft would injure the owner, and the secret related to a product or service in interstate or foreign commerce.

Economic espionage under § 1831 requires all of the trade-secret proof plus the additional element of intent or knowledge that the offense will benefit a foreign government or its instrumentality or agent. Across both statutes, intent does the heavy lifting. The government must prove a guilty purpose — not merely that information moved, but that the defendant meant to take a known trade secret, for another’s benefit, to the owner’s harm. One caution on the knowledge element: in United States v. You, 74 F.4th 378 (6th Cir. 2023), the Sixth Circuit held that the government need not prove the defendant knew the information satisfied every part of the legal definition of a trade secret — knowing it was proprietary and unauthorized is enough. That makes the objective trade-secret requirements, which the government must still prove in full, all the more important to contest.

Penalties for Trade Secret Theft

Theft of trade secrets under § 1832 carries a statutory maximum of 10 years in prison for an individual, along with fines and the criminal forfeiture of property connected to the offense; an organization can be fined the greater of $5 million or three times the value of the stolen trade secret. Economic espionage under § 1831 is more serious still — up to 15 years for an individual and a fine of up to $5 million, with organizational fines reaching the greater of $10 million or three times the value of the trade secret.

As with other financial crimes, the sentence within those limits is shaped by the Sentencing Guidelines, and the value of the trade secret — the gain sought or the loss caused — is the dominant factor. That valuation is frequently disputed. An owner’s estimate of what its information is worth, often built on development costs or projected profits, can be far higher than any defensible measure of value. Scrutinizing that figure is central work, and our federal sentencing practice addresses the analysis.

Applied insight. In trade secret cases, the alleged value of the secret drives the sentence the way a loss figure drives a fraud case. Owners have every incentive to value their information generously. Testing that number — against what the information could actually command, and against what was genuinely secret — is often the most consequential sentencing work in the case.

Defending a Trade Secret Theft Case

A trade secret defense often begins before intent — with the information itself. If the material was not a trade secret because the owner failed to protect it, because it was publicly available or readily ascertainable, or because it was really the defendant’s own general skill and knowledge, the prosecution cannot succeed. Reverse engineering and independent development are lawful, and conduct that amounts to either is not theft.

Where the information does qualify, the defense turns to intent and authorization. The statute requires a knowing, purposeful theft — an intent to benefit someone other than the owner and to injure the owner. Many cases involve genuine ambiguity: an employee authorized to use information, a good-faith belief about what could be retained, a dispute that belongs in civil court rather than a courtroom of criminal consequence. For a § 1831 charge, the foreign-benefit element is a separate hurdle the government must clear. We examine what the information was, how it was protected, what the defendant was authorized to do, and what the defendant actually intended. Promising a result would be dishonest, and we refuse to — what we offer instead is a defense that contests every element, starting with whether a trade secret existed at all.

What Changed in Trade Secret Prosecutions (2022–2026)

The enforcement landscape shifted in February 2022, when the Justice Department ended its branded “China Initiative” after an internal review and folded that work into a broader strategy for countering nation-state threats. The change was one of framing and emphasis, not retreat: §§ 1831 and 1832 prosecutions have continued, and since 2023 the interagency Disruptive Technology Strike Force has focused investigative resources on the transfer of sensitive technology to foreign adversaries. For anyone whose work touches international collaboration — academic, scientific, or commercial — the practical risk of a federal investigation remains real.

The appellate courts have meanwhile read § 1831 broadly. In United States v. Zheng, 113 F.4th 280 (2d Cir. 2024), the Second Circuit held that economic espionage does not require any state-sponsored or state-coordinated intelligence activity — the defendant’s own intent to benefit a foreign government or instrumentality is enough, and the intended benefit need not even be economic; strategic or reputational advantage suffices. The court also confirmed that a conspiracy conviction does not require proof that the information was actually a trade secret, only that the defendant believed it was. Those holdings give prosecutors room, and they make the intent evidence — emails, applications, statements about purpose — the battleground.

The defense story is at sentencing. In the same You case noted above, the Sixth Circuit affirmed the conviction but threw out the sentence, because the district court’s “intended loss” estimate was internally inconsistent — it leaned on market projections it had already rejected as puffery and confused anticipated sales with anticipated profits. The decision is a roadmap for valuation challenges: a trade-secret loss figure must follow a consistent logic, and inflated owner-side estimates are vulnerable. Paired with the Guidelines’ intended-loss rule, the valuation fight is frequently where years of exposure are won or lost.

The most powerful authority on that fight is United States v. Yu Xue, 42 F.4th 355 (3d Cir. 2022), where the Third Circuit held that intended loss under the Guidelines means the pecuniary harm the defendant purposely sought to inflict — and that, absent proof of such a purpose, a court cannot set the loss equal to the trade secret’s development cost or fair market value. Crucially, the court drew a line the government often blurs: an intent to gain from the stolen information is not the same as an intent to inflict a loss on its owner, and neither the loss of exclusive control nor the embarrassment of a breach is, without more, the kind of pecuniary harm the loss table measures. For a defendant facing a loss figure built on an owner’s development costs, Xue can be the difference between a single-digit offense-level bump and a sentence-defining enhancement.

Cross-Border and Extraterritorial Reach

Trade secret prosecutions increasingly cross borders, and the Economic Espionage Act follows. Under 18 U.S.C. § 1837, the statute reaches conduct outside the United States in two situations: when the offender is a U.S. citizen, permanent resident, or U.S.-organized entity, or when any act in furtherance of the offense was committed inside the United States. That second basis is broad — a single domestic email, download, meeting, or marketing step can pull an otherwise foreign course of conduct within federal jurisdiction. The reach is not limited to individuals, either; in United States v. Pangang Group Co., 135 F.4th 1142 (9th Cir. 2025), the Ninth Circuit allowed an economic-espionage prosecution of Chinese state-affiliated companies to proceed, rejecting their claim of foreign sovereign immunity.

For a defendant, the cross-border posture cuts in two directions. It expands where a case can be brought and invites the government to stack the foreign-benefit theory under § 1831. But it also opens defense ground: the government must still tie the conduct to a qualifying domestic act, prove the statutory intent rather than mere foreign association, and establish venue in the district where the taking actually occurred. Each of those requirements is a point of leverage, and none of them is satisfied simply because a case has an international dimension.

Why Work With Elizabeth Franklin-Best, P.C.

Trade secret prosecutions are brought wherever the alleged victim sits, so a defense team has to travel well. Elizabeth Franklin-Best is a member of the bars of the United States Supreme Court and all twelve federal circuit courts of appeals, and pro hac vice admission allows her to take district court cases nationwide. In 2026, Chambers USA ranked the firm for Litigation: White-Collar Crime & Government Investigations — the category that covers economic espionage and data-theft defense work like this.

That standing is grounded in a deep federal record. Our principal attorney, Elizabeth Franklin-Best, has appeared in more than 330 federal proceedings — over 190 in the United States district courts, more than 120 in the federal courts of appeals, and matters at the certiorari stage of the Supreme Court — and has briefed and argued well over 100 federal appeals in all twelve circuits. She is also the author of Reversing Your Criminal Conviction. Past results do not guarantee any future outcome, but that volume of trial-court and appellate work is what a technical, expert-heavy trade secret prosecution demands.

Trade secret cases are technical and definition-driven — they reward close work on what the information was, how it was guarded, and what a defendant truly intended. Every defense we build starts with those specifics, not with a generic playbook, because the difference between an employee’s know-how and a protected secret is decided on facts. This guide is one chapter of our white-collar crime defense practice, which also covers the computer fraud charges that so often accompany these cases.

Talk With a Trade Secret Theft Lawyer

If a former employer has accused you of taking proprietary information, or if federal agents have contacted you about trade secrets, the matter can move quickly from a civil dispute to a criminal investigation — our guide to the federal criminal process explains how that escalation works. We start with a paid, one-hour initial consultation: a focused review of what was taken, how it was protected, what you were authorized to do, and the exposure you actually face.

Frequently Asked Questions