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President Clinton's signature on the
Economic Espionage Act of 1996 culminated a nearly two-year effort on the
part of the FBI and U.S. industry professionals to provide new legal tools to
prosecute those who commit economic espionage by stealing trade secrets. The
Economic Espionage Act (EEA) specifically proscribes the various acts defined
under economic espionage and addresses the U.S. national and economic
security aspects of the crime. The law also addresses the theft of trade
secrets where no foreign involvement is found.
As defined in the Economic Espionage Act
of 1996, the term trade secret refers to all forms and types of financial,
business, scientific, technical, economic or engineering information,
including patterns, plans, compilations, program devices, formulas, designs,
prototypes, methods, techniques, processes, procedures, programs, or codes,
whether tangible or intangible, and whether or how stored, compiled, or
memorialized physically, electronically, graphically, photographically, or in
writing if:
- The owner thereof has taken reasonable
measures to keep such information 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.
The owner of a trade secret is the person
or entity that has rightful legal or equitable title to, or license in, the
trade secret.
Before the enactment of the EEA, there was
virtually no federal statute that outlawed the theft of trade secrets.
Federal prosecutors were limited to using laws such as the Interstate
Transportation of Stolen Property Act, the Computer Fraud and Abuse Act, and
Mail and Wire Fraud statutes, to prosecute individuals for the theft of trade
secrets. Due to the limitations and inadequacies of these laws in prosecuting
the theft of trade secrets, it became evident that a new federal statute was
needed.
Provisions
The EEA contains two separate provisions
that make the theft or misappropriation of trade secrets a federal criminal
offense. The first provision, under Section 1831, is directed toward foreign
economic espionage and requires that the theft of a trade secret be done to
benefit a foreign government, any instrument of a foreign government, or
foreign agent. In contrast, the second provision, under Section 1832, makes
the commercial theft of trade secrets a criminal act regardless of who
benefits.
Reflecting the more serious nature of economic
espionage, a defendant convicted for violating Section 1831 can be imprisoned
for up to 15 years and fined $500,000 or both. Corporations and other
organizations can be fined up to $10 million. A defendant convicted for theft
of trade secrets under Section 1832 can be imprisoned for up to 10 years and
fined $500,000 or both. Corporations and other entities can be fined no more
than $5 million.
A defendant cannot be convicted under the
EEA if it is proven that the elements of a trade secret were discovered
through parallel development or reverse engineering. In addition, the EEA
does not apply to individuals who seek to capitalize on their lawfully
developed knowledge, skills, or abilities. The EEA also does not prohibit
legitimate economic collection or reporting by personnel of foreign
governments by lawful means.
The EEA provides that the court, in
imposing sentencing, "shall" order the forfeiture of any proceeds
or property derived from violations of the EEA, and may order the forfeiture
of any property used to commit or to facilitate the commission of the crime.
While the EEA does not provide for civil forfeiture proceedings, it does
authorize the government to file a civil action seeking injunctive relief.
The law may be applied to offenses outside
the U.S. if any act in furtherance of the offense was committed in the U.S.
or the offender is a U.S. person or organization.
Before the EEA was passed, victims of
trade secret thefts were faced with the dilemma that by reporting the matter
to law enforcement authorities the trade secret may be publicly revealed
during criminal prosecution. The EEA provides that courts must issue orders
necessary to protect the confidentiality of trade secrets, consistent with
Federal Rules of Procedure and the Constitution. The prosecution is
permitted to immediately appeal any order authorizing or directing disclosure
of a trade secret.
The EEA should serve as a powerful
deterrent and is a very important law enforcement and security management
tool for protecting intellectual property rights. The EEA is not intended to
convert all thefts of trade secrets into criminal cases; however, the EEA
substantially raises the stakes in the arena of economic espionage.
To report violations of the EEA or to
obtain additional information, contact the local FBI Awareness of National
Security Issues and Response (ANSIR) coordinator. Telephone numbers for
FBI field offices are listed in most telephone directories.
Reference
Largely copied from Annual
Report to Congress on Foreign Economic Collection and Industrial Espionage,
June 1997, and brochure The Economic Espionage Act of 1996: A Brief
Guide, both prepared by the National Counterintelligence Center.
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