Earlier this week, the New York Times reported that the FBI is investigating the St. Louis Cardinals for allegedly hacking the Houston Astros’ player personnel database. This story illustrates some of the ways in which trade secrets are protected under the law.
A trade secret is any information which (i) derives economic value from not being generally known to the public and (ii) is the subject of reasonable efforts to maintain secrecy. Examples include technical data, formulas, financial data, product plans, lists of customers and suppliers, proprietary algorithms, software code or processes, sales and distribution methods and recipes – essentially any information that gives your business a competitive advantage and is kept secret. Because trade secrets must, by their very nature, remain secret, there is no federal or state registry for trademarks.
Trade secrets are entitled to certain legal protections. First, Georgia, like many other states, has adopted the Uniform Trade Secrets Law (Ga. Code § 10-1-761). This statute allows an owner of a trade secret to seek injunctive relief to prevent a third party from misappropriating a trade secret. Furthermore, a trade secret owner may sue for monetary damages in the event a trade secret is misappropriated. In the event the misappropriation is willful or malicious, a court may award punitive damages and attorney’s fees.
In addition to the civil remedies available, stealing a trade secret may also constitute a crime. The Computer Fraud and Abuse Act makes it a federal crime to intentionally access a protected computer without authorization if damage is inflicted on the computer’s owner. The Economic Espionage Act of 1996 also criminalized the theft of trade secrets (regardless of whether a computer was hacked in connection with the misappropriation of the trade secret).
The Astros’ player personnel database clearly constitutes a trade secret, and the FBI investigation appears to be focused upon which Cardinals employees violated the Computer Fraud and Abuse Act and the Economic Espionage Act.
Below are some interesting articles addressing the FBI investigation of the Cardinals:
For the initial New York Times article reporting on the investigation, click here.
This Above the Law article addresses the potential criminal liability of the St. Louis Cardinals.
Corporate Counsel has a short reminder here that pursuing criminal charges may be more effective than a civil suit for victims of trade secret misappropriation.
Finally, here is a link from FiveThirtyEight regarding baseball espionage.
Part II of this series will address steps all businesses should take to protect their trade secrets and can be found here.