Engineers Convicted For Theft Of Trade Secrets

by Burr & Forman
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Two engineers were recently convicted under federal law for stealing trade secrets from Goodyear.  (United States v. Howley and Roberts, 2013 WL 399345 (Feb. 4, 2013 6th Cir.).)  Charles Roberts and Sean Howley worked as engineers for Wyko Tire Technology, a Tennessee Company.  Wyko supplied Goodyear with parts for tire-assembly machines.  Wyko also had an agreement with HaoHua South China Rubber Company to supply tire-building parts related to the swabbing-down process.  Unfortunately for Wyko, it had never built the parts it promised to HaoHua.  Goodyear, it turned out, was using machines like the ones Wyko needed to make.

Around the time Wyko entered the agreement with HaoHua, Goodyear asked Wyko to send a technician to repair some of its tire-assembly machines at a plant in Topeka, Kansas.  Instead of sending a technician, Wyko sent Roberts and Howley.  While Roberts and Howley were left unescorted for a few minutes, Howley used his cell-phone camera to take seven photos of a swabbing-down device on one of Goodyear’s tire-assembly machines.  When Howley returned to Tennessee, he sent the photos from his personal e-mail account to his Wyko account.  He then forwarded the photos to Roberts, stating that the photos were “not all great, but I think that they might tell us enough.”

Roberts, in turn, sent the photos to other members of Wyko’s design team.  He stated Goodyear was “somewhat guarded” because they knew Wyko was “working with competitors.”  He acknowledged that Howley was able to take the photos when Goodyear “left us on our own for a while.”  When Wyko’s IT manager discovered Roberts’ e-mail and pictures, he alerted Goodyear of the potentially illicit photos.  Goodyear notified the FBI which ultimately led to Roberts and Howley’s conviction.

Under federal law, a person who steals a trade secret that is produced or placed in interstate or foreign commerce can be fined and imprisoned up to 10 years.  (18 U.S.C. § 1832.)  A primary contention in the Roberts and Howley trial was whether the swabbing-down device Howley photographed was a “trade secret” covered by federal law.  Under federal law, information is a “trade secret” only if its owner has taken “reasonable measures” to keep the secret and the “information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.  (18 U.S.C. § 1839(3).)

Roberts and Howley’s convictions were supported in large part by Goodyear’s efforts to protect the secrecy of its tire-assembly machine’s design, including the swabbing-down device.  These included:

  1. protecting its Topeka, Kansas facility with a fence;
  2. requiring visitors to pass through a security checkpoint;
  3. requiring visitors to obtain advance permission before visiting the facility;
  4. requiring visitors to sign confidentiality agreements and agree not to take photographs during their visit; and
  5. requiring its suppliers, including Wyko, to keep Goodyear’s proprietary information secret.

The Court also found information regarding Goodyear’s swabbing down device was economically valuable because it was not “readily ascertainable through proper means” by the public, and Robert and Howley’s conduct shows the information they stole was important.

As shown by the convictions of Roberts and Howley, a company should take reasonable measures to protect its proprietary information.  The Court noted in Howley and Roberts the “’reasonable measures’ requirement does not mean a company must keep its own employees and suppliers in the dark about machines they need to do their work.”  However, a company cannot claim information is a trade secret if it does not treat the information like a trade secret.

It should also be noted that the same statute used to convict Roberts and Howley also imposes a fine up to $5,000,000 against a company which steals trade secrets.  Had Wyko used the stolen trade secrets and not alerted the FBI, it could have faced the same criminal charges and suffered significant economic loss.

If you would like additional information on trade secrets law, please contact one of the Burr & Forman Non-Compete & Trade Secrets team members.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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