Why spend millions of dollars employing a bunch of bright, talented employees to develop your business when you can just hire a worker from your rival to steal all their research?  As on every test you took in school, isn’t getting the right answer more important than figuring out how to solve the problem?

Competition for business is fierce.  Small price differences or lower development costs can win your company any number of contracts.  How can one effectively compete in today’s marketplace?

Some companies, in a word, cheat.

Korea-based KCC Silicones hired chemist Michael Agodoa of Michigan-based rival Wacker Chemical Corp. as a consultant in 2010.  Rather than taking years to determine the proper formulas and millions in experimentation costs on plastics used in extrusion, silicone mold making materials, and elastomers, KCC employed Mr. Agodoa to steal over 100 of Wacker’s trade secrets. 

Isn’t this what business people call a “win-win” situation?   Mr. Agodoa probably made enough extra cash to have a nice vacation or two.  KCC didn’t have to waste any time testing and certainly received a large “ROI” (return on investment).  Business, after all, is business.

Wacker Chemical spent two decades developing and refining their manufacturing methods.  Mr. Agodoa’s defense was that he shared Wacker’s knowledge and experience “in the spirit of scientific cooperation” over a period of two years.  In other words, KCC bought eighteen years’ worth of intelligence for the price of one consultant.

Facing up to forty-six months behind bars, Mr. Agodoa plea-bargained his way to a two-year federal prison sentence and a $7,500.00 fine.  Wacker Chemical’s losses were estimated at more than $15 million.

Trade secrets are valuable weapons in today’s global marketplace.  Trade secrets are often very costly to develop, and may provide the competitive edge for your company.  Although Mr. Agodoa only faced federal trade secret charges, the addition of even harsher criminal penalties under the Economic Espionage Act will hopefully make employees think twice about taking that moonlighting “consulting” job.

Federal prosecution for trade secret theft is a “closing the door after the horse has left the barn” approach.  Yes, it is nice to know that your trade secrets are protectable and additional statutes are increasing that protection.  As employers, however, it may be prudent to make your employees aware of the potential penalties before they decide to sell your proprietary information.  The Office of the National Counterintelligence Executive is a good place to look for materials that may be useful in your workplace.

As with students of every age, the temptation is to take the path of least resistance.  Just as with students, the reward is potentially great; your company could win that lucrative contract or catch up to the competition in a short amount of time.  Just find a way to “borrow” your competitor’s know-how.

With trade secret theft, and the Economic Espionage Act, the penalty is not a few days of vacation from school and a meeting with some toothless academic honor board.

You, like Mr. Agodoa, get to head straight to a federal penitentiary.

For more details on U.S. v. Agodoa, 13-cr-20525, (E. D. Mich. 2014), see the Rubber News article and the Bloomberg News article.