The Best Way to Respond to International Cybercrime

Imagine that your company has invested many years and many millions of dollars in developing a breakthrough technology. Imagine also that intellectual property associated with that undertaking walks out of your company’s doors and surfaces at a university in China, where your company’s inventive technology could be used to pose a competitive threat to your company’s products. Now what?

For one company, DuPont, no imagination is needed to envision the aforementioned scenario—a former employee stole trade secrets related to proprietary organic light-emitting-diode display technology valued at $400 million and passed them to a Chinese university. The offending employee was caught and convicted for his crime, but DuPont was hardly made whole. The Chinese university could not “unlearn” the DuPont trade secrets it had received, and the former employee could not come close to compensating DuPont for its loss. Thus, the federal prosecution of the employee was only a partial remedy.

The DuPont incident and the others like it that are sprouting up across the globe raise an important question: Aside from criminal prosecution, what can corporate victims of international cybercrime do to recoup, or at least mitigate, their losses? Given the current state of the law and the jurisdictional limits of federal courts, the answer may surprise you.

International Cybercrime Is a Growing Threat

Now more than ever, companies must be vigilant in protecting their intellectual property from international cybercrime. The increased importance of this issue is, perhaps, best demonstrated by the number of high-profile entities weighing in on the subject. In 2013 alone the White House released its “Administration Strategy on Mitigating the Theft of U.S. Trade Secrets” [PDF], the United States Intellectual Property Enforcement Coordinator (IPEC) released the “2013 Joint Strategic Plan on Intellectual Property” [PDF] and the Center for Strategic and International Studies released “The Economic Impact of Cybercrime and Cyber Espionage” [PDF].

Each publication documents in stark detail how international cybercrime costs U.S. businesses billions of dollars every year, and observes that costs are only expected to grow in the future. If one considers the regular media reports of security breaches at some of the largest companies in the world, it would appear that those expectations are well on their way to being met.

Despite the heightened need for international trade-secret protection, the tools available for remedying trade-secret theft remain limited. Both the White House and the IPEC materials note the need for strengthened domestic laws and more robust international cooperation. But in the near-term, victims of international trade-secret theft must pursue a state-law trade-secret claim in a U.S. district court or file a complaint with the International Trade Commission. Although the latter cannot award monetary damages, its expedited timetable and jurisdictional reach make it a superior option to the more traditional civil suit in a federal district court—particularly if the misappropriated trade secrets are used to manufacture and import products from overseas.

U.S. District Courts