Department of Justice
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Editor’s Note: This is the third in a series of posts addressing how corporate victims of trade secrets theft can enforce their intellectual property rights through the criminal justice system.  Prior posts can be found here and here.

Once a criminal investigation of trade secrets theft is underway, it’s not just a matter of the corporate victim passively watching the government pursue the case.  Pro-active engagement is required to maximize the benefits of a criminal investigation and prosecution.  But going about that the right way is an art form – there are many variables, unwritten rules, and traps for the inexperienced.  Effectively managing such situations begins with an understanding of the corporate victim’s relationship with the government.

Understanding and effectively managing the corporate victim’s relationship with the government

Corporate counsel — whether in-house or outside — who lack experience in the criminal justice realm sometimes labor under the misimpression that agents and prosecutors are beholden to the corporate victim that brought the case to them.  Not so.  Those charged with enforcing criminal laws are keenly aware that while they have certain obligations to the victim of any crime, their primary duty lies in enforcing the law and pursuing justice as servants of the public, not any private entity.  As the DOJ Prosecuting Intellectual Property Crimes manual states: “Prosecutors are obligated by statute and policy to assist victims in obtaining restitution and other remedies, but prosecutors are also obligated to serve the public interest.  Occasionally, those interests may be in tension.  In this regard, prosecutors should consider whether or to what extent IP victims are using the threat of criminal prosecution to advance their private interests[.]”

Thus, attempting to dictate the course of a criminal investigation to suit the corporate victim’s ends is a mistake.  Such a posture is potentially counter-productive because prosecutors are likely to recoil if they feel they are being manipulated to serve a private interest, particularly where rival companies are involved.  It is also a mistake to assume that a prosecutor is obligated to share detailed information about an investigation with the victim.  To the contrary, sound investigative practices require a need-to-know approach, and prosecutors are also strictly bound by the grand-jury-secrecy rules enshrined in Rule 6(e) of the Federal Rules of Criminal Procedure.  Thus, while any crime victim has “[t]he reasonable right to confer with the attorney for the government in the case” under the federal Crime Victims’ Rights Act, that right is quite limited as a practical matter.

This does not mean, however, that a corporate victim must or should stand idly by while the government investigates and builds a criminal case.  To the contrary, a pro-active approach is often critical to achieving the corporate victims goals as explained below.  It is, rather, a matter of striking the right tone.  First, credibility is paramount.  The prosecutor must be convinced that the corporate victim is being forthright in its interactions with the government – and that includes being candid about flaws in the case.  Second, rather than attempting to dictate particular actions it is usually better to suggest a menu of options for ways in which the corporate victim can offer assistance.  Over time, a sound, productive and entirely appropriate working relationship can normally be built between the prosecutor and the victim’s counsel that will help the government and the corporate victim achieve their respective goals.

Achieving the corporate victim’s goals through active engagement

A corporate victim of trade secrets theft is likely to have several goals, including immediate and ongoing protection of its proprietary information; attaining maximum damages in the form of restitution from the targets of the investigation; and sending a strong deterrent message to competitors, current and former employees, and the world at large.  A robust criminal prosecution serves all these ends, and a strong criminal case can be fostered by packaging and presenting evidence to the government in a compelling way rather than simply passively responding to requests for information.

The corporate victim should also focus on the array of criminal remedies available, including pre-indictment or pre-trial freezing of a corporate defendant’s assets to prevent dissipation; forfeiture of the proceeds or means of the crime and the mechanisms that exist under federal law to “remit” forfeited assets to the victim; mandatory restitution based on the broadest feasible scope of conduct; and terms of corporate probation that may replicate elements of civil injunctive relief.  In many cases, the victim’s and the government’s priorities and interests will naturally align with respect to potential remedies, but when they do not prosecutors may need to be convinced that a particular course of action would be mutually beneficial and worth the effort involved.  And all of this must be accomplished in a careful, balanced way for the reasons discussed above.

Finally, a corporate victim may have an additional set of goals where the criminal case is proceeding in parallel with civil litigation.  Such parallel proceedings raise a host of complex interconnections and cross-currents that yield both risks and opportunities for the victim-plaintiff.  Navigating some of those challenges will be the subject of the next post in this series.