RUSSIAN WEAPONS: New Amendments to Russia’s Trade Secret Law Target Thieving CEOs and Workers

New amendments to Russian law take aim at the theft of trade secrets by employees, with especially tough penalties for thieving CEOs.

The amendments to Russia’s Trade Secret Law became effective October 1, 2014. The goal of these amendments is to increase the protection of trade secrets by stiffening penalties for unauthorized disclosures by employees.

Under the amended Trade Secret Law, employees who disclose trade secrets have an express duty to reimburse their employer for any losses that it incurs as a result of such disclosure, if (i) the employee learned about the trade secret in the course of his employment duties, and (ii) the employee is liable for disclosing the trade secret.

An employer that incurs losses because its former employees have disclosed trade secrets to another party may demand compensation from the former employees if the information in question meets the legal definition of a trade secret. (See our primer on Russian trade secret law for the definition.)

The Trade Secret Law expressly provides that a CEO is under a duty to reimburse the entity for all losses caused by the CEO’s unauthorized disclosure of trade secrets. The CEO’s potential liability is significantly broader than that of other employees: the CEO is liable for both losses actually incurred and for lost profits, while other employees are only liable for losses actually incurred by their employer.