§ 5.11 Prosecution Guidelines

JurisdictionUnited States
Publication year2020

§ 5.11 Prosecution Guidelines

[1] Prosecutorial Discretion

The United States Attorneys' Manual notes that there are three situations in which the prosecutor may properly decline to take action despite having admissible evidence sufficient to obtain and sustain a conviction for a federal crime: (1) "when no substantial federal interest would be served by prosecution;" (2) when "[t]he person is subject to effective prosecution in another jurisdiction;" or (3) when "[t]here exists an adequate non-criminal alternative to prosecution."937 Despite this, limited resources have forced many United States Attorney's Offices to set guidelines on what type of white collar cases will be investigated and prosecuted. Such guidelines may also reflect the philosophy of the United States Prosecuting Attorney in a particular district. In addition, the higher standard of proof in criminal cases may mean, the matter may still be unsuitable for criminal prosecution and therefore be declined for prosecution by a United States Attorney's Office whereas the facts would give rise to a viable civil theft of trade secret case.

This does not mean that United States Attorney's Offices are completely rigid in their application of these guidelines. Failure to meet certain criteria does not necessarily mean that the United States Attorney's Offices will automatically decline the case, especially if there are other compelling reasons which warrant investigation and prosecution. This is particularly important in trade secret cases because strict adherence to such guidelines may underestimate the importance and seriousness of the criminal referral. It is important, therefore, for victims who are making a criminal referral to have an understanding of these factors in order to maximize the chances that the U.S. Attorney's Office will accept the case for investigation and prosecution. In particular, the victim should pay close attention to the amount of loss or damage that was caused by defendant's conduct since it is extremely unlikely that a large U.S. Attorney's Office will agree to prosecute an EEA case where the loss to the victim can best be described as de minimis.

[2] Guideline Factors938

[a] Information Qualifies as a Trade Secret

As a threshold matter, the victim must establish that the information in question qualifies as a trade secret and that, in particular, reasonable measures were taken to keep it confidential. Victims should understand that in this regard, the government has the very difficult burden of proving a negative, namely that the information was not generally available to the public. Federal prosecutors will need access to objective and independently verifiable evidence showing that the information was truly secret. In view of the nature of trade secrets, the victim will generally be the best source of this information. The government will be better able to deal with potential problems if it learns of these problems from the victim early in the process rather than for the first time at trial.

In particufar, in evaluating the merits of a referral for a violation of the EEA, a United States Attorney's Office may seek the following information:

(1) objective and independently verifiable evidence demonstrating that the information is a trade secret;
(2) whether the information is of a discrete nature that can be readily distinguished from less protected information;
(3) whether the victim or any of its subcontractors or licensees ever intentionally or inadvertently disclosed the information;
(4) whether the victim limited distribution of the information;
(5) the extent to which non-disclosure agreements were used to protect the information from outsiders and;
(6) the steps taken to protect the information including the extent of the computer and physical security measures.

The bottom line is that the victim does not have to show that drastic steps were taken to protect the trade secret but rather the victim must be able to demonstrate to the satisfaction of the U.S. Attorney's Office that its efforts were commensurate with the value of the trade secret and that the trade secret was not inadvertently disclosed to the public through, for example presentation at conferences or by publication in scientific journals or foreign patent applications.

[b] Type of Information

The EEA protects all information, regardless of type that meets the statutory definition of a "trade secret."939 The most obvious sort of trade secret is represented by research, formulas, and other scientific information. Business information, such as sales forecasts, market studies, risk analysis, training materials, employee records, customer lists, and budgets are less likely to be the subject of federal criminal prosecution because in most cases this sort of data is not obviously valuable enough to reach the threshold amount required by many United States Attorney's Offices. Moreover, it is often difficult to meet the standards of proof for business information. For example, it is very difficult for the government to prove beyond a reasonable doubt that a customer list was either not known to a competitor of the victim or was not legally obtainable. Furthermore, most business information depreciates in value so quickly that prosecution is not worth pursuing. Finally, business information is inherently more difficult to qualify through independent experts because...

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