Description of the Law
President Bill Clinton signed the Economic Espionage Act (EEA) into law in 1996. This enactment was after Congress acknowledged the significance of safeguarding trade secrets, intellectual properties, and other organizational and national intangible assets to the nation’s security and economic health (Department of Justice. 2020). Consequently, this bill was brought up to curb the problem of trade secret misappropriation and theft that was increasing rampantly. This bill aimed to criminalize misappropriation or theft of trade secrets. The economic espionage act (1996) has two provisions: EEA. U.S.C. § 1831 and EEA. 18 U.S.C. § 1832. The first provision of the EEA targets foreign economic espionage or thefts and misappropriation of intangible assets to benefit other countries or foreign agents. The second provision criminalizes the theft or misappropriation of trade secrets regardless of whomever they benefit. This provision can be applied when one company conspires to illegally benefit from another company’s trade secrets, intellectual property, or intangible assets. As Moberly (2014) notes, the Economic Espionage Act (1996) is unique in that it forms the first federal law that gives a broad definition and sets out punishment for theft and misappropriation of trade secrets. E.A.A. (1996) was enacted to help handle industrial espionage, the theft or misappropriation of the National Information Infrastructure Protection Act and trade secrets, and several other areas that Congress approved.
What is Covered Under the Law
The Economic Espionage Act (1996) mainly covers the areas of economic espionage and trade secrets. Most of the applications of the EEA (1996) have been about trade secrets, with the first episode of criminal prosecution under the action happening in 2010 (Johnson, 2019). Regarding economic espionage, which is one of the vital areas that the act covers, the law prohibits trade secrets misappropriation, which does not only cover the act but also planning or conspiring to misappropriate or steal trade secrets, with the understanding that such actions will benefit foreign powers (Johnson, 2019). Similarly, in economic espionage, the EEA (1996) provides the penalties on what happens when a violation occurs. The penalty is that a person guilty of violating the act can pay a maximum fine of $500,000 for every offense and serve up to 16 years of imprisonment. Organizations accused of economic espionage can pay up to $10 million in fines.
Trade secret theft is the second area that EEA (1996) covers. In this area, the act prohibits the theft or misappropriation of a company’s trade secrets about a product and involvement in interstate or international trade, understanding that such an action will harm the trade secret’s owner. As Johnson (2019) notes, trade secrets entail myriad types of engineering, economic, technical, scientific, business, and financial information that can be intangible, intangible, memorialized, compiled, and stored in writing, photographically, electronically, or physically provided that: the owner has put in place reasonable strategies aimed at maintaining the information as a secret, and that the information has actual or potential economic value. The act stipulates the penalties for trade secret theft as fines of up to $5 million for companies, with individuals not being fined but facing imprisonment of up to 10 years.
It is necessary to understand that the EEA (1996) has some exceptions to prohibitions, as indicated in Chapter 1833. The exceptions to prohibitions include any lawful activity that a political State subdivisions, the state, or any government entity. The second exception to prohibitions is reporting suspected events of violating the existing laws. These exceptions to prohibitions mean that some state, federal, or political subdivisions of the state have the legal right to access trade secrets and other intangible assets of a firm.
Several other crucial features can be found within the EEA, including the provision of illegal forfeiture of proceeds or property from the violation of the economic espionage act (EEA. 18 U.S.C. § 1834). In addition, the Economic Espionage Act allows the institute of civil enforcement’s Attorney General (AG) to take action and acquire needed injunctive reliefs for breaking EEA. 18 U.S.C. § 1836. Due to the difficulties in keeping the required secrecy, especially during legal proceedings, the Economic Espionage Act also provides that courts and other elements of the judicial system should take the necessary measures to safeguard the confidentiality and levels of privacy of the trade secrets as provided for under 18 U.S.C. § 1835. Lastly, the Economic Espionage Act also has provisions for proceeding when the offender is a permanent resident alien or citizen of the U.S. but who commits the crime outside the country as provided under 18 U.S.C. § 1834.
Why it is Important to Security
The Economic Espionage Act has several benefits but essentially aids in preventing security threats, especially from insiders. Moberly (2014) notes that, over time, companies are increasingly benefitting from revenue and value generated from intangible assets, which are highly exposed to insider threats. Insider threats and theft of important company intangible assets can cause massive harm to a firm’s competitiveness and financial performance. Thus, with the Economic Espionage Act (1996) criminalizing such acts, it is arguable that it will be easy to curb the loss of essential trade secrets at both company and national levels. In turn, improved security of trade secrets will help firms and other entities safeguard their competitiveness and financial performance. Preventing compromise, misappropriation, and theft of valuable intangible assets at the company level helps avoid compromise on a firm’s relationship, structural and intellectual capital, adverse market position fluctuations, undermined competitive advantages, and losses in revenue.
A second major benefit of the Economic Espionage Act is that it encourages fair competition. The act helps protect the valuable intellectual properties of a company in myriad ways, such as barring dishonest competitors from illegally accessing and benefitting from a company or individual’s intangible assets such as intellectual properties (Kim, 2018). The act provides the ground for prosecuting companies or individuals that want to trade secrets that belong to others illegally.
The EEA (1996) is important to security now, given the changing landscape of targets of criminals. In today’s world, private sector spies, criminals, and foreign intelligence services tend to target the private sector and U.S. industries because of the riches that lie in the intangible assets. According to the Director of National Intelligence, the enemies capitalize on traditional intelligence tradecraft to vie the cyber environment of most companies, where they can gain access to critical technology and business information residues. Access to this valuable information, such as trade secrets, is a security trade since it is one of the safest, fast, and most efficient ways through which adversaries can use gain unlawful access to the foundations or pillars of a company’s competitiveness or the nation’s economy. Successful espionages and efforts to compromise technological developments, trade secrets, and intellectual properties are a massive concern to the national security; any espionages against both the public and private sector are an important security concern and have massive potential for putting the property of firms or the nations in danger both in the short-term or long-term. The EEA (1996), alongside other strategies such as heavy investment in counterintelligence technologies, are some of the best ways that can be applied to thwarting security threats.
Department of Justice. (2020, January 21). 1122. Introduction to the economic Espionage Act. Retrieved from https://www.justice.gov/archives/jm/criminal-resource-manual-1122-introduction-economic-espionage-act
Johnson, L. (2019). Security controls evaluation, testing, and assessment handbook. Academic Press.
Kim, A. C. (2018). Prosecuting Chinese Spies: An empirical analysis of the economic espionage act. Cardozo L. Rev., 40, 749.
Moberly, M. D. (2014). Safeguarding intangible assets. Butterworth-Heinemann.