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Focus on Economic Espionage

Introduction | How to Protect Your Business | Definitions
Statutes | FAQs | How to Contact Us

Introduction
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 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 and classified information known as trade secrets. Foreign competitors who criminally seek economic intelligence generally operate in three ways to create their spy networks:

1. They aggressively target and recruit susceptible people (often from the same national background) working for U.S. companies and research institutions;
2. They recruit people to locate economic intelligence though operations like bribery, discreet theft, dumpster diving (in search of discarded trade secrets), and wiretapping; and,
3. They establish seemingly innocent business relationships between foreign companies and U.S. industries to gather economic intelligence including classified information.

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: 6 steps
1. Recognize there is a real threat.
2. Identify and valuate trade secrets.
3. Implement a definable plan for safeguarding trade secrets.
4. Secure physical trade secrets and limit access to trade secrets.
5. Confine intellectual knowledge.
6. Provide ongoing security training to employees.

Definitions

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.

CRIMINAL PENALTIES

Title 18 U.S.C., Section 1831 Economic Espionage

Foreign Beneficiary
Maximum Individual Fine: 15 years imprisonment/ $500,000.
Maximum Organizational Fine: $10 million.
Title 18 U.S.C., Section 1832 Theft of Trade Secrets


Regardless of Beneficiary.
Maximum Individual fine: 10 years imprisonment/
Less than $500,000.


Maximum Organizational fine: $5 million.
CRIMINAL FORFEITURE: The court requires that the violator forfeit to the United States any (1) property constituting, or derived from any proceeds the person obtained directly or indirectly, as the result of the violation, or (2) property used, or intended to be used, in any manner or part, to commit or facilitate the commission of the violation.

CIVIL PROCEEDINGS: In a civil action the Attorney General may obtain appropriate injunctive relief to prevent the offense. The District Courts of the United States have exclusive original jurisdiction of civil actions.

FAQs

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 Intellectual Property Rights. Contact your local FBI for further assistance.

Is the FBI proactive in its approach to economic espionage?
Yes. FBI Director Robert Mueller has designated espionage as the FBI's number two priority - second only to terrorism. 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.

How to Contact Us
To report violations, obtain additional information, or schedule a presentation regarding Economic Espionage, contact the Economic Espionage Unit at 202/324-6930.

http://www.fbi.gov/hq/ci/economic.htm