Representatives Introduce Bill to Increase Penalties for Economic Espionage

June 27, 2012. Rep. Lamar Smith (R-TX), Rep. John Conyers (D-MI), and others introduced HR 6029 [LOC | WW], the "Foreign and Economic Espionage Penalty Enhancement Act of 2012".

On March 30, 2011, Sen. Herb Kohl (D-WI), Sen. Sheldon Whitehouse (D-RI), and Sen. Christopher Coons (D-DE) introduced S 678 [LOC | WW], the "Economic Espionage Penalty Enhancement Act". The Senate Judiciary Committee (SJC) held a hearing on June 22, 2011. The SJC amended and approved that bill on December 8, 2011.

The Senate bill would increase the maximum penalty for economic espionage, which is codified at 18 U.S.C. 1831, from 15 to 20 years.

The House bill would do this, and increase the maximum fine from $500,000 to $5,000,000.

The House bill would also increase the maximum fine for corporations and other organizations. The statute currently provides that "Any organization that commits any offense described in subsection (a) shall be fined not more than $10,000,000." HR 6029 provides that the maximum fine is "not more than the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided".

Hence, under the language of the House bill, a corporation that engages in economic espionage could face a fine in the billions of dollars.

However, it should be noted that the main violators of this statute lie beyond the jurisdiction of US courts. Neither bill would change the underlying prohibition, or make any other changes that would enhance the ability of prosecutors to reach foreign actors.

The statute provides that "Whoever, intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent, knowingly -- (1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret; (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret; (3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; (4) attempts to commit any offense described in any of paragraphs (1) through (3); or (5) conspires with one or more other persons to commit any offense described in any of paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy," shall be punished.

The House bill was referred to the House Judiciary Committee (HJC). The bill's original sponsors include the Chairman and ranking Democrat on the full Committee, as well as the Subcommittee on Intellectual Property, Competition and the Internet.

The other original cosponsors are Rep. Bob Goodlatte (R-VA), Rep. Mel Watt (D-NC), Rep. Howard Coble (R-NC), Rep. Howard Berman (D-CA), Rep. Frank Wolf (R-VA), Rep. Adam Schiff (D-CA), Rep. Jason Chaffetz (R-UT), Rep. Ted Deutch (D-FL), Rep. Ted Poe (R-TX), and Rep. Steve Chabot (R-IN).