The Cold War is not over, it has merely moved into a new arena: the global marketplace. The FBI estimates that every year billions of U.S. dollars are lost to foreign and domestic competitors who deliberately target economic intelligence in flourishing U.S. industries and technologies, and who cull intelligence out of shelved technologies by exploiting open source information and company trade secrets. Foreign competitors who criminally seek economic intelligence generally operate in three ways:
- They aggressively target and recruit insiders (often from the same national background) working for U.S. companies and research institutions;
- They conduct economic intelligence through operations like bribery, cyber intrusions, theft, dumpster diving (in search of discarded intellectual property or prototypes), and wiretapping; and,
- They establish seemingly innocent business relationships between foreign companies and U.S. industries to gather economic intelligence, including trade secrets.
In an effort to safeguard our nation’s economic secrets, the Economic Espionage Act (EEA) was signed into law on October 11, 1996.
How to Protect Your Business from Espionage: Six Steps
- Recognize there is an insider and outsider threat to your company.
- Identify and valuate trade secrets.
- Implement a proactive plan for safeguarding trade secrets.
- Secure physical and electronic versions of your trade secrets.
- Confine intellectual knowledge on a “need-to-know” basis.
- Provide training to employees about your company’s intellectual property plan and security.
Economic Espionage is (1) whoever knowingly performs targeting or acquisition of trade secrets to (2) knowingly benefit any foreign government, foreign instrumentality, or foreign agent. (Title18 U.S.C., Section 1831).
Trade secrets are 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, which the owner has taken reasonable measures to protect; and has an independent economic value. “Trade secrets” are commonly called classified proprietary information, economic policy information, trade information, proprietary technology, or critical technology.
Theft of trade secrets occurs when someone (1) knowingly performs targeting or acquisition of trade secrets or intends to convert a trade secret to (2) knowingly benefit anyone other than the owner. Commonly referred to as Industrial Espionage. (Title 18 U.S.C., SECTION 1832).
A Foreign Agent is any officer, employee, proxy, servant, delegate, or representative of a foreign government.
A Foreign Instrumentality is defined as: (1) any agency, bureau, ministry, component, institution, or association; (2) any legal commercial or business organization, corporation, firm, or entity; and, (3) substantially owned, controlled, sponsored, commanded, managed or dominated by a foreign government.
Statutory authority: The Economic Espionage Act (EEA) of 1996
TERRITORIAL LIMITS: EEA protects against theft that occurs either (1) in the United States, or (2) outside the United States and (3) an act in furtherance of the offense was committed in the United States, or (4) the violator is a US person or organization.
What are some methods of targeting or acquiring trade secrets?
1. Steal, conceal, or carry away by fraud, artifice, or deception;
2. Copy, duplicate, sketch, draw, photograph, download, upload, alter, destroy, photocopy, replicate, transmit, deliver, send, mail, communicate, or convey; and, 3. Receive, buy, or possess a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization.
Does the Economic Espionage Act of 1996 apply if the offender is a foreign person?
Yes. The Act states that (1) whoever knowingly performs targeting or acquisition of trade secrets to (2) knowingly benefit any one other than the owner. Other elements will apply for prosecution.
Does the Economic Espionage Act of 1996 apply if it occurs outside the United States?
Yes. However, the violator must be (1) a US person or organization; or (2) an act in furtherance of the offense was committed in the United States.
Are there other statutes that can apply if trade secrets are not classified and therefore cannot be prosecuted under the Economic Espionage Act of 1996 Title 18 U.S.C. Section 1831 and 1832?
Yes. The following is a list of violations that may apply: mail fraud, wire fraud, interstate transportation of stolen property, export control, and misuse of a computer system. Contact your local FBI for further assistance.
Is the FBI proactive in its approach to economic espionage?
Yes. FBI Director Robert Mueller has designated counterintelligence as the FBI’s number two priority , second only to counterterrorism. The Economic Espionage Unit is dedicated to countering the economic espionage threat to include developing training and outreach materials; participating in conferences; visiting private industry; working with the law enforcement and intelligence community on requirement issues; and providing specific classified and unclassified presentations.
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