By David Selden, Julie A. Pace and Heidi Nunn-Gilman
A recent criminal prosecution of a Scottsdale technology company manager arrested for conspiring to sell trade secrets to a Taiwanese competitor highlights the importance of businesses taking precautions to protect their trade secrets. In addition to confidentiality and trade secret agreements with employees and implementation of employment policies to protect proprietary information, criminal prosecution of offenders is a tool that can occur in selected situations.
The recent case prosecuted by the U.S. Attorneys Office in Arizona involved a senior manager of a company in the semiconductor testing machine business. The manager allegedly conspired with a competitor in Taiwan to sell new designs developed by his employer, sending photos and information and software through encrypted messaging systems.
The Scottsdale manager was arrested in the Fall of 2025 and was held in custody until his recent guilty plea. He will undergo three years of supervised release. Theft of trade secrets can be a crime under both federal and Arizona law, with both Congress and the Arizona Legislature having strengthened trade secret and confidentiality protections of Company information and data in recent years.
This recent prosecution highlights the benefits for employers to review their handbooks and policies on trade secret protections, to identify the type of information that they consider to be trade secrets and confidential and proprietary and to ensure that they have enforceable agreements in place with their employees to deter violations.
Do NOT rely on AI to draft enforceable agreements or policies. AI is fraught with legal errors and tends to write documents with a more generous approach to support Plaintiffs and employee positions. AI is not as strong on writing documents to protect companies and reduce risk.
At Pace Selden Gilman PLLC, we regularly work with clients to review or prepare policies and restrictive covenant agreements to protect confidentiality and proprietary documents and information. The objective, of course, is to prevent violations from occurring, and hopefully avoid having to resort to the Courts to enjoin and remedy violations after they have occurred. Exit interviews and reminders about confidentiality agreements and return of company property, along with cease and desist letters are helpful items to use at companies. For assistance, contact David Selden at dselden@psgmlaw.com or 602.851.8795, Julie Pace at jpace@psgmlaw.com or 602.851.8799, or Heidi Nunn-Gilman at hgilman@psgmlaw.com or 602.851.8797.