CI and Theft of Trade Secrets

Lessons learned from Becton Dickinson’s losing trade secrets case against R&D employee

Competitive Intelligence professionals need to be aware of the case of the R&D engineer, Minh Hoang. A month ago, the allegations from his former employee, Becton Dickinson (BD), that he stole trade secrets, were dismissed by the jury.  

In 2017, Hoang was charged with 11 accounts of stealing trade secrets going back to 2015. These were all related to antimicrobial dressings. He was accused of sending key information to a Chinese company, trying to get the Chinese IP rights for a product based on this information in the hope that he would be able to sell these back to a US company for some $6m.

These charges of giving highly valuable competitive intelligence to a competitor were very specific, but the jury ruled against BD. Why?

Hoang had been with the firm for about 30 years and had access to a wide range of information. BD undertook regular audits of information at its Sandy, UT facilities and cataloging key information as BD trade secrets. However, in the trial, it was not clear which of the documents Hoang had downloaded were designated as trade secrets or that Hoang had the intent of harming BD by downloading these documents. Under the 2016 Federal Defend Trade Secrets Act, the prosecution needed to show that any documents taken were both designated trade secrets and that there was intent to cause economic injury by taking them.

It appears that BD took issue with Hoang when he refused to sign a retention agreement back in 2015.  At the time he was traveling to China in an attempt to improve some of his inventions. Together these set off concern signals in the company. As BD’s fears escalated in 2017, they took the Trade Secrets case out against him. The case lasted two years. Hoang argued that at no time was he trying to steal BD secrets but was only trying to improve his inventions, the IP of which were all signed over to BD. He stated that his dealings with China were all above board and part of his improvement attempts.

Although BD could see what Hoang was downloading and presumably had an audit of which documents were designated trade secrets through their audits, they seem to be unable in the trial to clearly connect the two or refute Hoang’s argument that he believed that none of the documents he downloaded were Trade Secrets.  Added to this, they could not show that he had the intent of damaging BD economically.  

The concerns by companies to protect Trade Secrets rather than IP have increased significantly since the 2016 act. However, this case underlines how difficult it is to prove theft of Trade Secrets. Having everyone sign into their building. Having security badges. Undertaking regular audits is not enough. Not only does a company have to have clear evidence of theft, but clear proof that the information taken was defined as a Trade Secret and that there was intent to cause economic damage.  

Being aware of cases like Hoang’s should help CI managers better understand that proving that valuable competitive intelligence had been maliciously taken is not easy. It is not just a matter of presenting evidence of information being downloaded on to a thumb drive. The owner of the information has to clearly show that it had been designated as a trade secret before it was taken and that there was intent to cause economic damage. Together these add up to a really high bar.

https://news.bloomberglaw.com/ip-law/ex-becton-dickinson-engineer-not-guilty-of-taking-trade-secrets