RICO And Trade Secrets

What Is A Trade Secret?

A trade secret is confidential and protected information that is not only crucial to the success of its owner but also beneficial to a rival operating in the same market as its owner.

What Must One Do Before Filing A RICO Action Predicated On The Theft Of Trade Secrets?

Given the split in the federal courts, it is essential to check the appropriate circuit law before filing a RICO action predicated on the theft of trade secrets. For example, cases from the Third Circuit essentially foreclose a RICO action unless a plaintiff alleges a closed-ended continuity of predicate acts that have occurred over a substantial period of time. If not, then a plaintiff will have to demonstrate open-ended continuity by alleging that the defendants would continue to steal the plaintiff’s trade secrets unless restrained. Conversely, the Sixth Circuit allows a plaintiff to demonstrate open-ended continuity by showing use of stolen trade secrets. A plaintiff need not demonstrate that defendants would continue to steal trade secrets—a tough, if not unrealistic, burden to carry.

What Is Crucial To Allege In A RICO Complaint Predicated On The Theft Of Trade Secrets?

Overall, it is crucial to allege in as much factual detail as possible the circumstances demonstrating the theft of trade secrets, continued and/or threatened use of the stolen trade secrets and the resulting victimization, how the theft will lead to the commission of further criminal activity, and the future criminal activity—the predicate acts—as separate and distinct violations.