Phillip Groves could face up to 40 years in jail and a $1,000,000 fine after a federal jury in Kentucky convicted him of violating 18 U.S.C. § 1832. That statute criminalizes converting a trade secret related to a product or service used, or intended for use, in interstate or foreign commerce if the conversion was intended to harm the trade secret’s owner or benefit anyone other than the owner. The statute sets forth specific conduct qualifying as a conversion, including:

  • stealing, or without authorization, appropriating, taking, carrying away, or concealing, or by fraud, artifice, or deception obtaining such information; and
  • without authorization copying, duplicating, sketching, drawing, photographing, downloading, uploading, altering, destroying, photocopying, replicating, transmitting, delivering, sending, mailing, communicating, or conveying such information.

Much like the Uniform Trade Secrets Act, a “trade secret” under this statute includes a wide range of information that the owner has taken reasonable measures to keep secret and that derives independent value from “not being generally known to, or not being readily ascertainable through proper means by, the public.” Specifically included are:

all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing.

According to the indictment and the recent press release, the U.S. attorneys offered evidence that Groves copied and transferred approximately 30,000 files containing trade secret information from his former employer’s—White Drive Product, Inc.—network onto an external hard-drive. The copying and transferring occurred on February 22 and 27, 2008, around two to three months before he resigned to work for a White Drive competitor. The jury found that Groves did so intentionally to harm White Drive and to benefit himself and White Drive’s competitor.

Sentencing was scheduled for July 23, 2014. But Groves has filed a motion challenging the jury verdict and asking the court to enter a judgment of acquittal or to order a new trial. We will continue to monitor this case and provide relevant updates.