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The Economic Espionage Act of 1996: An Underused Tool for Investigators

by Kim Williams  -   May 6, 2014
economic-espoionage_640

 

In response to the growth of technological innovations, the theft of confidential information from American companies by foreign governments, and the dearth of laws addressing the theft of trade secrets, Congress enacted the Economic Espionage Act (EEA) in 1996. This law gives prosecutors and law enforcement a statute they can apply specifically to the unique crime of industrial espionage. Prior to its enactment, prosecutors had to jerry-rig cases together using laws that dealt with computer fraud, stolen property or other offenses generally related to but not specifically applying to the crime of economic espionage.

The EEA contains two sections which directly address the theft of trade secrets, one relates specifically to espionage and one is more general in its language and application.

  • Section 1831 (economic espionage): This section criminalizes the misappropriation of trade secrets with the knowledge or intent that the theft will benefit a foreign power.
  • Section 1832 (theft of trade secrets): This section criminalizes the misappropriation of trade secrets related to or included in a product that is produced for or placed in interstate (including international) commerce, with the knowledge or intent that the misappropriation will injure the owner of the trade secret.

Congress reiterated its support for this Act in 2013 when it amended it to include stiffer penalties, ranging up to 15 years in prison and fines up to $10 million or three times the value of the stolen trade secrets. In spite of Congress’ interest in prosecuting those stealing trade secrets from American businesses, courts have only considered nine cases under Section 1831 of the EEA (as of 2013).  According to Robin Kuntz in an article published in the Berkeley Technology Law Journal, the primary reason Section 1831 has not been utilized more frequently stems from a precedent set whereby the courts have considered it with a narrow interpretation. 1 

For instance, in two cases considered under Section 1831 (U.S. vs. Lee and U.S. v Jin), the courts did not focus on an element which would have allowed for a broader interpretation. Referred to as “mens rea,” this more liberal approach would have considered whether the defendant intended or knew of a benefit to a foreign government at the time trade secrets were stolen. Had the courts focused on this concept, convictions may have been obtained and also the path might have been paved for additional cases to be effectively considered under Section 1831.2

Section 1832 has been applied more frequently than Section 1831 in cases involving the theft of trade secrets, in part because its language allows for a broader interpretation.

Although it has not been widely used, law enforcement, prosecutors and corporations should keep the provisions of the Economic Espionage Act of 1996 in mind when investigating crimes involving the theft and misappropriation of trade secrets.

1 Robin L. Kuntz. How Not to Catch a Thief: Why the Economic Espionage Act Fails to Protect American Trade Secrets (http://btlj.org/data/articles/28_AR/0901-0934_Kuntz_081413_Web.pdf)

2 Robin L. Kuntz. How Not to Catch a Thief: Why the Economic Espionage Act Fails to Protect American Trade Secrets (http://btlj.org/data/articles/28_AR/0901-0934_Kuntz_081413_Web.pdf), pp. 919-921.

For more information:

Economic Espionage and Trade Secret Theft

FBI page on economic espionage 

Economic espionage and trade secrets

Economic Espionage Act of 1996


Thumbnail image: 27368521 Copyright Kentoh, 2014 Used under license from Shutterstock.com

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