Disruptive Technology Strike Force Initiates Federal Prosecutions Targeting Trade Secret Theft

June 27, 2023

In early 2023, the U.S. Department of Justice and U.S. Department of Commerce launched the Disruptive Technology Strike Force to target illicit actors, strengthen supply chains and protect critical technology assets from theft by nation-state adversaries.

The Strike Force includes members from the Justice Department’s National Security Division, the Commerce Department’s Bureau of Industry and Security (BIS), the Federal Bureau of Investigations (FBI), Homeland Security Investigations and 14 U.S. Attorneys’ Offices across the country. In announcing the Strike Force’s inception, the U.S. deputy secretary of commerce and FBI deputy director emphasized the threat that trade secret theft poses to national security and a stable American economy.

In late May 2023, the Strike Force announced five federal prosecutions resulting in four arrests. Cases currently are pending in California, New York and Arizona. The recent enforcement actions largely focus on theft of trade secrets and export control violations that have military applications.

The two cases in California involve former employees who stole sensitive technologies from their U.S.-based tech company employers to market them to Chinese competitors. In one case, the former employee stole 3D modeling software programs he helped develop, to build and market his own competing business in China. In the other case, the former employee accessed and gathered large quantities of autonomous system data after accepting a full-time offer to join a U.S.-based subsidiary of a company headquartered in China. The remaining cases involve individuals who circumvented export controls to help Russian and Iranian entities obtain sensitive technology in violation of U.S. laws.

As these federal prosecutions demonstrate, companies can expect to see significant increases in cases involving theft of trade secrets and export control enforcement, as well as an increase in cases referred for criminal prosecution. Exporters and developers of advanced technologies, such as supercomputing and exascale computing, artificial intelligence, advanced manufacturing equipment and materials, quantum computing, and biosciences should be particularly vigilant with export compliance protocols and monitoring employee actions in this heightened enforcement and global threat environment. These enforcement actions likely will require increased cooperation with law enforcement agencies and highlight the need for robust internal procedures for protecting trade secrets and for compliance with export controls, especially given BIS and the Justice Department’s recent focus on voluntary disclosures.

Please contact the authors if you have any questions regarding trade secret theft or export compliance protocols.