[Congressional Record: March 30, 2011 (Senate)]
[Page S1978-S1993]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. KOHL (for himself, Mr. Whitehouse, and Mr. Coons):
S. 678. A bill to increase the penalties for economic espionage; to
the Committee on the Judiciary.
Mr. KOHL. Mr. President, the ability of American companies to out
innovate and better compete with their global competitors is more
important today than ever. Yet, the FBI estimates that U.S. companies
lose billions of dollars each year to criminals who steal their trade
secrets--their innovative ideas, formulas, designs and other
proprietary information. For example, last year, a Chinese national
working for an American automobile manufacturer was convicted of
stealing trade secrets for a Chinese competitor. His actions were
estimated to cost the American company between $50 and $100 million.
That is why I rise today with Senators Whitehouse and Coons to
introduce the Economic Espionage Penalty Enhancement Act of 2011. This
bill is simple and straightforward--it increases the maximum penalties
for stealing a trade secret to benefit a foreign company. The measures
in this bill were recommended to Congress by the U.S. Intellectual
Property Enforcement Coordinator, in conjunction with the Departments
of Commerce, Homeland Security, Justice and State, and the U.S. Trade
Representative. The Economic Espionage Act Penalty Enhancement Act,
while a modest bill, is intended to be a starting point for a larger
discussion about the implementation of the Economic Espionage Act, EEA,
and whether additional updates and improvements are needed in light of
the global economy and advances in technology.
In 1996, Congress enacted the EEA, making it a federal crime to steal
a trade secret. Nearly fifteen years later, trade secret theft and
economic espionage continue to pose a threat to U.S. companies to the
tune of billions of dollars a year. As we reexamine the law, we will be
looking at how we can help prosecutors bring more of these criminals to
justice and companies better protect their trade secrets. Among the
issues we will look at are whether additional protections are needed
for trade secrets as part of EEA prosecutions, whether whistleblower
protections should be added, and whether we need a federal civil
private right of action.
Businesses spend every resource at their disposal to develop
proprietary economic information including their customer lists,
pricing schedules, business agreements, and manufacturing processes, to
name a few. This information is literally a business's lifeblood.
Stealing it can be the death knell for a company. The chief executive
of GM recently said that industrial espionage is a major threat to the
company and that he worries about it ``every day.'' But these thefts
have a much greater impact beyond the American company that falls
victim to an economic spy. The economic strength, competitiveness, and
security of our country rely upon the ability of industry to compete
without unfair interference from foreign governments and from their own
domestic competitors. Without freedom from economic sabotage, our
companies lose their hard-earned advantages and their competitive edge.
This problem is not new, but it has grown and evolved in the fifteen
years since the Economic Espionage Act became law. U.S. corporations
face intense competition at home and abroad. As much as 80 percent of
the assets of today's companies are intangible trade secrets. They must
be able to protect their trade secrets to remain competitive and keep
our economy strong. Advances in technology make the protection of trade
secrets more difficult and more critical than ever. Trade secrets can
simply be downloaded from a company's computer, uploaded to the
Internet, and transferred anywhere in the world in a matter of minutes.
Within a matter of days, a U.S. corporation can lose complete control
over its trade secrets. Unfortunately, we have many examples of the
risk and harm posed by economic espionage. In 2009, a Chinese-born
engineer who had been employed by a leading aerospace company was
convicted of economic espionage and sentenced to fifteen years in
prison for collecting sensitive information about the U.S. space
shuttle that he intended to share with the Chinese government. Prior to
his sentencing, the district court judge said that although we do not
know how much information he shared with China, we do know that he hurt
not only his former employer but also the national security of the
United States.
Domestic economic espionage, known as industrial espionage, can be
just as threatening to American companies. For example, just this month
a former computer programmer for a Wall Street bank was sentenced to
eight years in prison for stealing secret code used in the bank's
valuable high-frequency trading system. The trading system earned the
bank $300 million in 2009 alone. He took a job at a startup company
that was planning to directly compete with the Wall Street bank, and
gave that company the stolen code.
In my home State of Wisconsin a disgruntled employee of a company
that manufactures aftermarket airplane parts was prosecuted under the
economic espionage statute and sentenced to thirty months in prison for
attempting to sell trade secrets to competitors. The trade secret--
details and measurements of particular airplane parts--took years and
hundreds of thousands of dollars for the manufacturer to create, test
and gain Federal Aviation Administration approval. Fortunately, the
perpetrator was caught before he sold the trade secrets, but had he
been successful the manufacturer would likely have been forced out of
business.
The examples above illustrate the seriousness of these crimes. The
legislation that we introduce today will increase the maximum sentence
for economic espionage from 15 years to 20 years and to direct the
Sentencing Commission to consider increasing the penalty range for
theft of trade secrets and economic espionage. This is a first step in
our efforts to do more to stem the flow of valuable business
information out of our country. We must definitively punish anyone who
steals information from American companies. Over the coming months,
this measure will provide a framework for our discussions about how we
can do more to solve this problem. I look forward to working with my
colleagues on this critical problem.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 678
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Economic Espionage Penalty
Enhancement Act''.
SEC. 2. AMENDMENT TO TITLE 18.
Section 1831(a) of title 18, United States Code, is amended
by striking ``15 years'' and inserting ``20 years''.
SEC. 3. DIRECTIVE TO SENTENCING COMMISSION.
Pursuant to its authority under section 994(p) of title 28,
United States Code, the United States Sentencing Commission
shall--
(1) review its guidelines and policy relating to a two-
level enhancement for economic espionage; and
(2) as a part of such review consider amending such
guidelines to--
(A) apply the two-level enhancement to the simple
misappropriation of a trade secret;
(B) apply an additional two-level enhancement if the
defendant transmits or attempts to transmit the stolen trade
secret outside of the United States and an additional three-
level enhancement if the defendant instead commits economic
espionage (i.e., he/she knew or intended that the offense
would benefit a foreign government, foreign instrumentality,
or foreign agent); and
(C) provide when a defendant transmits trade secrets
outside of the United States or commits economic espionage,
that the defendant should face a minimum offense level.
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