Today, the Senate Judiciary Committee approved U.S. Senator Herb Kohl's bipartisan "Economic Espionage Penalty Enhancement Act of 2011" by voice vote. This legislation would increase maximum penalties for stealing a trade secret to benefit a foreign company. The Federal Bureau of Investigation (FBI) estimates that U.S. companies lose billions of dollars each year to criminals who steal their ideas, formulas, designs and other proprietary information. This legislation was also introduced by Senators Chris Coons (D-DE) and Sheldon Whitehouse (D-RI) and is co-sponsored by Senators Richard Blumenthal (D-CT), Tom Coburn (R-OK), Dianne Feinstein (D-CA), Lindsey Graham (R-SC), Amy Klobuchar (D-MN) and Jon Kyl (R-AZ).
Just 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. 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."
"Corporations and businesses work hard to develop new and innovative ideas. In a matter of seconds, those months and years of hard work and testing could end up in the hands of competitors," Kohl said. "This legislation would increase the penalties for those who steal trade secrets and give them over to foreign companies. We must protect our businesses and make sure their ideas and processes worth billions of dollars remain safe and protected."
In 1996 Congress enacted the Economic Espionage Act, making it a federal crime to steal a trade secret. Fifteen years later, trade secret theft has grown and evolved and economic espionage continue to pose a threat to U.S. companies.
Today, as much as 80% of companies' assets 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 hours or days, a U.S. corporation can lose complete control over its trade secrets.
Economic espionage is all-too-common and often very harmful. In 2009, for example, 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.
The Economic Espionage Penalty Enhancement Act will increase the maximum sentence for economic espionage from 15 years to 20 years and direct the Sentencing Commission to consider increasing the penalty range for theft of trade secrets and economic espionage. The bill is intended to be a starting point for a larger discussion about the implementation of the Economic Espionage Act and whether additional updates and improvements are needed in light of the global economy and advances in technology. The measures in Kohl's 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.