Federal Crime of Economic Espionage – 18 U.S.C. § 1831
Economic espionage is described as the illegal targeting or acquiring trade secrets and other secret information belonging to the United States government, business, corporation, or even an individual person.
The actual illegal act of economic espionage, which is often called theft of trade secrets, has to be committed by a foreign agent or with the specific intent to benefit a foreign government.
This theft offense could provide a foreign entity with important economic information at significantly less cost of research and development and has the real potential to cause significant economic losses.
Economic espionage sounds like something you might do wearing a trench coat and a fedora on dark, rainy nights. Sometimes it is, but it can be far more prosaic though.
It isn’t unheard of for the government to investigate people simply because they changed jobs, left one company, and took their expertise to another. The Economic Espionage Act of 1996 discussed below is the first federal statute that makes it a crime to steal trade secrets and contains several provisions.
First, 18 U.S.C. § 1831 addresses only the theft or other misappropriation of a trade secret benefiting a foreign government, foreign instrumentality or foreign agent.
If you’re being investigated, or if you’ve been charged with economic espionage, it is important you know and understand the facts on this crime.
The law is complicated, but the more you know, the better prepared you’ll be to defend yourself. Our federal criminal defense lawyers will review the laws below.
The Economic Espionage Act of 1996 (EEA)
The crime of economic espionage primarily derives from the Economic Espionage Act (EEA), originally passed in 1996. That act has two distinct parts.
As noted, the first, codified under 18 U.S.C. § 1831, makes it a crime to steal trade secrets and intellectual property from an American business or other entity to benefit a foreign government.
In that sense, the EEA isn’t all that different from the Espionage Act. The second part of the law, 18 U.S.C. § 1832, is much broader. It criminalizes the theft of such materials no matter who may be benefiting from that theft. In essence, any theft of intellectual property violates the EEA.
All of this may sound straightforward. Don’t steal trade secrets, and you should be fine. Unfortunately, things aren’t always so simple. First, the definition of “stealing” under the EEA is broader than you might expect. It can be about literally taking a physical object, like a flash drive or a prototype model.
However, just as often, it involves taking something virtual rather than tangible: the concept behind a new piece of technology, an idea for a new product, a strategy for a marketing campaign. This means stealing can happen in many ways:
- You might take something from an office;
- You might make a copy of a proprietary document;
- You might simply memorize a recipe and pass it along to someone else.
You can even violate the EEA without meaning to. 18 U.S.C. § 1834 provides for criminal forfeiture of any money or property acquired from a violation of the Act.
18 U.S.C. § 1836 permits the Attorney General to obtain civil injunctive relief. 18 U.S.C. § 1835 requires courts to enter necessary orders in order to protect the confidentiality of trade secrets in any proceeding.
Closely related offense of 18 U.S.C. § 1832 theft of trade secrets occurs someone knowingly steals, or without authorization, takes a trade secret that is intended for use in interstate or foreign commerce.
What is a Trade Secret?
Likewise, “trade secrets” and “intellectual property” can have many different meanings. The law defines a trade secret as:
- Something not known or generally accessible by competitors;
- Something with commercial value or that provides a competitive edge in the marketplace;
- Something the owner has taken reasonable measures to keep secret;
- All types of financial, business, scientific, technical, or engineering information that has an economic value.
In practical terms, though, intellectual property can take virtually any form, including design specifications, prototypes, computer code, formulas, plans, techniques, methods, patterns, and devices.
This includes whether they are tangible or intangible, or how it’s stored, compiled, or memorialized physically, electronically, or in writing if the owner has taken reasonable steps to keep the information secret. You may not even know what’s protected at your company and what isn’t.
Who Investigates and Enforces the Act?
There are several federal government agencies that work together to investigate alleged economic espionage offenses, including the following:
Federal Bureau of Investigation (FBI),
National Counterintelligence and Security Center (NCSC),
United States Department of Justice (DOJ),
Computer Crime and Intellectual Property Section,
Intellectual Property Rights Branch,
United States Attorney General’s Office (USAG).
The EEA also includes a “whistleblower provision” that is designed to protect individuals who have decided to report information related of a suspected crime.
The Elements of an Economic Espionage Case
Proving an economic espionage case isn’t easy. Typically, it involves six separate elements:
- First, you must, without the owner’s consent, have taken, destroyed, or conveyed the information in question;
- You must have known at the time you stole it that the information was proprietary;
- The information must, in fact, have been proprietary. That is, it must have been a trade secret;
- You must have intended to use the property for the benefit of someone other than the property’s owner;
- You must have known the property owner would be injured as a result of the theft;
- Finally, to be charged as a federal as opposed to state crime, the product connected to the theft must have been involved in interstate commerce.
A successful defense, then, might take aim at any of the elements listed above. You might argue, for instance, that the information in question was widely known outside the company and thus not a trade secret at all.
Or, you might claim that you simply didn’t realize the information was proprietary when you passed it along to someone else.
What are the Penalties?
There are several sanctions that a court might impose if you are found guilty of economic espionage, and you should also know that you can face any or all of them.
- Prison sentences: A person convicted of economic espionage faces up to ten years in federal prison;
- Fines: Economic espionage carries fines of up to $500,000;
- Forfeiture: In addition to any fines, anyone convicted of economic espionage must give up any money or property gained from the theft;
- Civil suits: Finally, the government made clear in the EEA that an economic espionage conviction does not limit a business or entity’s right to seek economic relief in civil court.
Most of these punishments are monetary, and such consequences can be serious enough. However, you should not overlook the possibility that you could do significant time if you are ultimately found guilty.
Defenses for Economic Espionage Charges
Federal economic espionage charges under 18 U.S.C. § 1831 is a serious situation that carries harsh penalties. If you are under investigation, you will need to consult with skilled legal representation immediately to protect your best interest.
We might be able to negotiate with the federal prosecutor for reduced charges with lesser penalties, or even a case dismissal.
Every case is unique and will first require a close review of all the details in order to determine an appropriate strategy. You will need a lawyer with experience in federal courtrooms.
We might be able to make an argument there was a lack of necessary intent. Recall from above it must be proven you had intent to pass the information along to a foreign entity. Perhaps you never had an intent to give away the trade secrets.
Another potential defense includes you were falsely accused of economic espionage by someone with other self-interest motives.
Eisner Gorin LLP is based in Los Angeles County and represents clients in California and throughout the United States. Contact our law firm for an initial consultation at (877) 781-1570, or fill out our contact form.