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Senate Makes Progress on Two Bills to Combat Dangerous Intellectual Property Theft

Press Release

Location: Washington, DC

U.S. Senator Chris Coons (D-Del.), a member of the Senate Judiciary Committee, today applauded progress on two measures to help combat the theft of intellectual property, which not only costs American jobs, but threatens the safety and wellbeing of consumers. The first bill, the bipartisan Economic Espionage Penalty Enhancement Act (S. 678), would increase the maximum penalties for theft of a trade secret to benefit a foreign company or government. The second bill, the bipartisan Counterfeit Drug Penalty Enhancement Act (S. 1886), would increase the maximum penalties for trafficking in counterfeit pharmaceuticals. Senator Coons is a cosponsor of both measures, which were approved by the Senate Judiciary Committee Thursday morning.

"Individuals who steal ideas from American companies are stealing more than just intellectual property -- they are stealing jobs, and when pharmaceuticals are involved, they are putting lives at risk," Senator Coons said. "This country cannot afford to let the rampant intellectual property theft underway now to continue to go unchecked. Trade secrets -- whether in the form of ideas, schematics, or formulas -- are critical to American companies and especially to American manufacturers. As a nation we haven't done enough to protect the ideas on which our economy depends, but these measures will help change that. I'm glad the Senate Judiciary Committee today overwhelmingly approved the Counterfeit Drug Penalty Enhancement Act and the Economic Espionage Penalty Enhancement Act. "

This Counterfeit Drug Penalty Enhancement Act will raise the maximum sentences for offenses related to counterfeit pharmaceuticals from 10 years to 20 years. In addition, the bill also directs the Sentencing Commission to study and consider increasing the guidelines for these crimes still further.

The Economic Espionage Penalty Enhancement Act would increase the maximum sentence for economic espionage -- defined as trade secret theft to benefit a foreign government -- from 15 years to 20 years and direct the Sentencing Commission to consider increasing the penalty range for industrial espionage -- defined as trade secret theft to benefit a foreign individual or corporation. The measures in S. 678 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.

In 1996, Congress enacted the Economic Espionage Act, making it a federal crime to steal a trade secret. Nearly 15 years later, trade secret theft has grown and evolved and economic espionage continue to pose a threat to U.S. companies.

U.S. companies lose billions of dollars each year to criminals who steal their ideas, formulas, designs and other proprietary information. Just last year, a Chinese national working for Ford manufacturer was convicted of stealing trade secrets for a Chinese competitor. His actions were estimated to have 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."

In September of this year, DuPont won a $920 million verdict against a Korean company that had underwritten the theft of trade secrets behind DuPont's next-generation Kevlar Fiber. In 2009, paint company Valspar suffered a $20 million loss when its proprietary paint formulas were stolen. This sum represented about one-eighth of its profits that year.

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