Economic Espionage

We've read about economic espionage in spy novels and “Mission Impossible" storylines. Often, the stories are saturated with complicated international criminal syndicates. They attempt to steal trade secrets and other forms of intellectual property.

But what does espionage mean in terms of criminal law and national security? Is it a clandestine, foreign-sponsored plot? Does it mean white-collar criminals at work? Although we might wonder about a Tom Cruise-like figure battling espionage, the reality is far more complicated. The Department of Justice and the U.S. attorney general often deal with more nuanced scenarios. Foreign entities often aim to extract proprietary information from corporations and governments.

Filmmakers might exaggerate these exciting portrayals in action movies. However, the real-world complexities of foreign commerce industrial espionage are profound.

Corporate espionage can cause significant financial losses to businesses nationwide. Thus, it is crucial to understand that these actions constitute a violation of the law. Congress established a set of laws to penalize these acts.

This article discusses the various types of espionage and what to do if you've been charged with a crime against the government.

Economic Espionage Defined

Congress criminalizes economic espionage under the Economic Espionage Act of 1996 (EEA). With the amendment of Title 18 of the U.S. Code, stealing trade secrets became a federal crime. According to this congressional act, a person violates the law if the U.S. attorney can prove beyond a reasonable doubt that:

  1. A person stole or, without authorization of the trade secret owner, obtained, destroyed, or conveyed confidential information
  2. The person knew this information had independent economic value as a trade secret
  3. The information was a trade secret
  4. The defendant knew that they intended the offense to benefit a foreign government, foreign instrumentality, or foreign agent, or that it would do so

Economic espionage often occurs in private companies. It is an unlawful act that targets critical economic intelligence, such as intellectual property rights, trade secret information, and economic intelligence. Technically, it is the theft of proprietary information across various sectors, including finance, technology, government policy, and more.

Those convicted under this statute could face the following penalties:

  • Criminal forfeitures
  • Fines of up to $500,000 per offense
  • Imprisonment of up to 15 years for individuals
  • For organizations, fines of up to the greater of $10 million or three times the value of the trade secret

Note that the federal government often updates the penalties for this offense. It is best to stay updated on changes in the law.

Example of Corporate Espionage

The Federal Bureau of Investigation (FBI) stated in 2015 that economic espionage was on the rise, noting a 53% increase in these espionage cases against U.S. companies over the prior year. This counterintelligence data revealed economic espionage resulted in the loss of hundreds of billions of dollars in 2015 alone.

For example, spies target a computer widget company to steal engineering data and get ahead in the market. Or an employee of a competing company visits the computer plant and takes photos and videos of the company's secrets. Afterward, they share it with their country of origin in hopes of recreating the technology without the financial obligations that come with conducting or paying for the research.

United States v. Lange (2002) is a well-known example of economic espionage and the impact of federal legislation to address it. The Economic Espionage Act of 1996 (18 U.S.C., sections 1831-1839) protected the company from criminal prosecution. In this case, RAPCO was a manufacturer of parts for aircraft. The company then learned that Matthew Lange, a former employee, offered to sell trade secrets. Lange was attempting to sell the manufacturing processes of RAPCO to third parties.

The company reported Lange to the FBI. The FBI arrested the disgruntled employee in a sting operation. During the operation, Lange negotiated with an FBI officer to sell a copy of manufacturing processes. Lange was then convicted and sentenced under the Economic Espionage Act.

In another case, in 2011, a Boston-area man was convicted on a charge of foreign economic espionage for the misappropriation of trade secrets. The defendant provided protected corporate trade information to an undercover federal agent who was posing as an Israeli intelligence officer. The court sentenced him to six months in prison (followed by six months of home confinement) and fined him $25,000.

Theft of Trade Secrets

Economic espionage looks like another crime: theft of trade secrets. Trade secret theft occurs when someone knowingly steals or misappropriates a trade secret. This act is often committed for the economic benefit of anyone other than the trade secret owner.

To qualify as a trade secret, the information must not be generally known or reasonably ascertainable by others. And the trade secret owner must have made a reasonable effort to keep such information secret. This crime carries a penalty of up to 10 years in federal prison for individuals and fines of up to $5 million for organizations.

Protect Your Interests: Contact a Criminal Defense Attorney

Economic espionage happens beyond the silver screen. Although this crime is often seen in fictional action films, laws that address it bring real-life consequences. Violating this criminal act can bring severe repercussions.

Thus, if your — or your company's — trade secrets are at risk, it is recommended to consult a criminal defense lawyer. They can give you legal advice and suggest reasonable measures to safeguard your rights. As the owner of trade secrets, it is best to stay informed about federal law including injunctive relief and other civil remedies that may be available in your case.

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