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ECONOMIC ESPIONAGE AND TRADE SECRET 

THEFT: ARE OUR LAWS ADEQUATE FOR 

TODAY’S THREATS? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CRIME AND TERRORISM 

OF THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 13, 2014 

Serial No. J–113–59 

Printed for the use of the Committee on the Judiciary 

( 
(II) 

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

DIANNE FEINSTEIN, California 

CHUCK SCHUMER, New York 

DICK DURBIN, Illinois 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

AL FRANKEN, Minnesota 

CHRISTOPHER A. COONS, Delaware 

RICHARD BLUMENTHAL, Connecticut 

MAZIE HIRONO, Hawaii 

CHUCK GRASSLEY, Iowa, Ranking Member 

ORRIN G. HATCH, Utah 

JEFF SESSIONS, Alabama 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

MICHAEL S. LEE, Utah 

TED CRUZ, Texas 

JEFF FLAKE, Arizona 

KRISTINE LUCIUS, Chief Counsel and Staff Director 

KOLAN DAVIS, Republican Chief Counsel and Staff Director 

SUBCOMMITTEE ON CRIME AND TERRORISM

SHELDON WHITEHOUSE, Rhode Island, Chairman 

DIANNE FEINSTEIN, California 

CHUCK SCHUMER, New York 

DICK DURBIN, Illinois 

AMY KLOBUCHAR, Minnesota 

LINDSEY GRAHAM, South Carolina, 

Ranking Member 

TED CRUZ, Texas 

JEFF SESSIONS, Alabama 

MICHAEL S. LEE, Utah 

AYO GRIFFIN, Democratic Chief Counsel 

DAVID GLACCUM, Republican Chief Counsel 
(III) 

C O N T E N T S 

MAY 13, 2014, 2:34 P.M. 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, 

prepared statement .......................................................................................... 28 

Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode Island ...... 1 

prepared statement .......................................................................................... 29 

WITNESSES 

Witness List ............................................................................................................. 27 

Coleman, Randall C., Assistant Director, Counterintelligence Division, 

Federal Bureau of Investigation, Washington, D.C. ......................................... 4 

prepared statement .......................................................................................... 31 

Greenblatt, Drew, President and Owner, Marlin Steel Wire Products, 

Baltimore, Maryland ............................................................................................ 12 

prepared statement .......................................................................................... 87 

Hoffman, Peter L., Vice President, Intellectual Property Management, The 

Boeing Company, Chicago, Illinois ..................................................................... 8 

prepared statement .......................................................................................... 38 

Norman, Douglas K., Vice President and General Patent Counsel, Eli Lilly 

and Company, Indianapolis, Indiana ................................................................. 14 

prepared statement .......................................................................................... 94 

Passman, Pamela, President and Chief Executive Officer, Center for Responsible Enterprise & Trade (CREATe.org), Washington, D.C. ............................. 10 

prepared statement .......................................................................................... 47 

QUESTIONS 

Questions submitted to Randall C. Coleman by Senator Whitehouse ................ 99 

Questions submitted to Peter L. Hoffman by Senator Flake ............................... 100 

Questions submitted to Douglas K. Norman by Senator Flake ........................... 101 

Questions submitted to Pamela Passman by Senator Flake ............................... 102 

ANSWERS 

Responses of Randall C. Coleman to questions submitted by Senator 

Whitehouse ........................................................................................................... 103 

Responses of Peter L. Hoffman to questions submitted by Senator Flake ......... 105 

Responses of Douglas K. Norman to questions submitted by Senator Flake ..... 106 

Responses of Pamela Passman to questions submitted by Senator Flake .......... 107 

(1) 

ECONOMIC ESPIONAGE AND TRADE SECRET 

THEFT: ARE OUR LAWS ADEQUATE FOR 

TODAY’S THREATS? 

TUESDAY, MAY 13, 2014 

UNITED STATES SENATE, 

SUBCOMMITTEE ON CRIME AND TERRORISM, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:34 p.m., in Room 

SD–226, Dirksen Senate Office Building, Hon. Sheldon 

Whitehouse, Chairman of the Subcommittee, presiding. 

Present: Senators Whitehouse, Coons, Graham, Hatch, and 

Flake. 

OPENING STATEMENT OF HON. SHELDON WHITEHOUSE, 

A U.S. SENATOR FROM THE STATE OF RHODE ISLAND 

Chairman WHITEHOUSE. The hearing of the Senate Judiciary 

Subcommittee on Crime and Terrorism will come to order. I am expecting that my Ranking Member, Senator Lindsey Graham, will 

be here shortly, but I just saw him on the C-SPAN screen, so I 

know that he is on the floor and not here. But I have permission 

from his staff to proceed, and he will join us as soon as his schedule permits. 

I also want to recognize in the audience Ed Pagano, who has 

spent many a happy hour in here when he was working for Chairman Leahy. It is good to have him back in a different capacity. 

We are having a hearing today that is entitled ‘‘Economic Espionage and Trade Secret Theft: Are Our Laws Adequate for Today’s 

Threats?’’ Today the Subcommittee is going to explore how we can 

better protect American businesses from those who try to steal 

their valuable intellectual property. 

American companies are renowned as being the most innovative 

in the world. Companies of every size and in every industry, from 

manufacturing to software to biotechnology to aerospace, own large 

portfolios of legally protected trade secrets they have developed and 

innovated. In some cases, the ‘‘secret sauce’’ may be a company’s 

most valuable asset. The theft of these secrets can lead to devastating consequences. For small businesses it can be a matter of 

life and death. 

The risk of trade secret theft has been around as long as there 

have been secrets to protect. There is a reason why Coca-Cola has 

kept its formula locked away in a vault for decades. But in recent 

years, the methods used to steal trade secrets have become more 
2 

sophisticated. Companies now must confront the reality that they 

are being attacked on a daily basis by cyber criminals who are determined to steal their intellectual property. 

As Attorney General Holder has observed, there are two kinds of 

companies in America: Those that have been hacked and those that 

do not know that they have been hacked. 

Today a criminal can steal all of the trade secrets a company 

owns from thousands of miles away without the company ever noticing. Many of the cyber attacks we are seeing are the work of foreign governments. China and other nations now routinely steal 

from American businesses and give the secrets to their own companies—their version of competition. 

And let us be clear. We do not do the same to them. We are now 

going through a healthy debate in America about the scope of government surveillance, but there is no dispute about one thing: Our 

spy agencies do not steal from foreign businesses to help American 

industry. 

While cyber attacks are increasing, traditional threats remain. 

Company insiders can still walk off with trade secrets to sell to the 

highest bidder. Competitors still steal secrets through trickery or 

by simply breaking into a factory or office building. 

It is impossible to determine the full extent of the loss to American businesses as a result of the theft of trade secrets and other 

intellectual property. There have been estimates that our Nation 

may lose anywhere from one to three percent of our gross domestic 

product through trade secret theft alone. 

The Defense Department has said that every year an amount of 

intellectual property larger than that contained in the Library of 

Congress is stolen from computer networks belonging to American 

businesses and government. And estimates of the value of IP stolen 

by foreign actors are as high as $300 billion. 

General Keith Alexander, until recently the head of NSA and of 

Cyber Command at the Pentagon, has characterized the cyber theft 

of American intellectual property as, I will quote, ‘‘the greatest 

transfer of wealth in history.’’ And, of course, we are on the losing 

end of it. 

But no estimate can fully capture the real impact of trade secret 

theft because when other countries and foreign businesses steal our 

trade secrets, they are stealing our ideas. They are stealing our innovation. Most importantly, they are stealing our jobs. 

In my own State of Rhode Island, we continue to face unacceptably high unemployment, despite having some of the most innovative businesses in the country. If we do not protect our businesses 

from those who steal their intellectual property, then we are letting 

that innovation go to waste, and we are letting American jobs go 

overseas. 

In the past, some companies were reluctant to talk about this 

issue because no one likes to admit that they have been victimized. 

But many are now coming forward to speak out because they recognize how important it is that we work together to address this common threat. 

I particularly want to thank the company representatives who 

are appearing before us today in the second panel as well as many, 
3 

many others who have worked closely with me and with other Senators on this issue. 

I am encouraged that the administration last year released a 

blueprint for a strategy to combat trade secret theft, and agencies 

across the government are increasing efforts to address this problem. The administration must recognize that the theft of intellectual property is one of the most important foreign policy challenges 

we face, and it must communicate to China and other nations that 

stealing from our businesses to help their businesses is unacceptable. 

We in Congress must do our part. We need to make sure that 

our criminal laws in this area are adequate and up to date. Last 

fall, Senator Graham and I released a discussion draft of legislation designed to clarify that state-sponsored overseas hacking could 

be prosecuted as economic espionage and to strengthen criminal 

protection of trade secrets. 

We received valuable comments and suggestions about this legislation, and we look forward to hearing from our witnesses today 

about how to improve our laws and what we can do to help defend 

our industries. And we hope to introduce our legislation in the coming weeks. 

Companies also need civil remedies against those who steal from 

them. While State law has traditionally provided companies with 

remedies for misappropriation of trade secrets, there is currently 

no Federal law that allows companies themselves to seek civil remedies against those who steal from them. Senators Coons and 

Hatch have recently introduced legislation to give victims of trade 

secret theft the option of pursuing thieves in Federal court. Senator 

Flake has also introduced legislation to give companies a Federal 

civil remedy for trade secret theft. I hope that the Judiciary Committee will act soon on legislation to strengthen both the criminal 

and civil protections against trade secret theft, and I look forward 

to working with those colleagues toward that goal. 

Today we will hear from witnesses in government, industry, and 

the nonprofit sector who confront the threat of trade secret theft 

on a daily basis. What I hope will be clear by the end of this hearing is that we need an all-in approach to this hearing. We must 

strengthen our criminal laws, and our law enforcement agencies 

must prioritize stopping trade secret theft before it occurs, and investigate it and prosecute it when it does occur. 

I will add that there remains an urgent need for us to pass 

broader cybersecurity legislation, and I appreciate working with 

Senator Graham on that effort. 

I look forward to hearing from our witnesses today and to working with my colleagues on both sides of the aisle to address this 

critical issue. 

Our first witness is Randall C. Coleman, the Assistant Director 

of the Counterintelligence Division at the Federal Bureau of Investigation. Mr. Coleman is responsible for ensuring that the FBI carries out its mission to defeat foreign intelligence threats. Mr. Coleman began his career as a special agent with the FBI in 1997 and 

has previously served as assistant special agent in charge of the 

San Antonio Division, chief of the Counterespionage Section, and 

special agent in charge of the Little Rock Division. Prior to his ap-
4 

pointment to the FBI, Mr. Coleman served as an officer in the 

United States Army for nine years. We are delighted that he could 

join us today, and we ask him to proceed with his testimony. 

[The prepared statement of Senator Whitehouse appears as a 

submission for the record.] 

Proceed, sir. 

STATEMENT OF RANDALL C. COLEMAN, ASSISTANT DIRECTOR, COUNTERINTELLIGENCE DIVISION, FEDERAL BUREAU 

OF INVESTIGATION, WASHINGTON, DC 

Mr. COLEMAN. Good afternoon, Chairman Whitehouse. I am 

pleased to be here today with you to discuss the FBI’s efforts to 

combat economic espionage and theft of trade secrets. 

The FBI considers the investigation of theft of trade secrets and 

economic espionage a top priority. In 2012 alone, the National 

Counterintelligence Executive estimated a range of loss to the U.S. 

economy approaching $400 billion to foreign adversaries and competitors who, by illegally obtaining a broad range of trade secrets, 

degraded our Nation’s advantage and innovative research and development in the global market. This immense loss threatens the 

security of our economy, and preventing such loss requires constant 

vigilance and aggressive mitigation. 

The FBI is diligently working to investigate and apprehend targets pursuing economic espionage against U.S.-based businesses, 

academic institutions, cleared defense contractors, and government 

agencies, and has made significant progress in putting some of the 

most egregious offenders behind bars. 

Economic espionage and theft of trade secrets are increasingly 

linked to the insider threat and the growing trend of cyber-enabled 

trade secret theft. The insider threat employee may be stealing information for personal gain or may be serving as a spy to benefit 

other organizations or country. Foreign competitors aggressively 

target and recruit insiders to aid the transmittal of a company’s 

most valued proprietary information. 

The FBI, however, cannot protect the Nation’s economy by acting 

alone. The FBI Counterintelligence Division’s Strategic Partnership 

Program oversees a network of more than 80 special agents that 

are serving as strategic program coordinators who work hand in 

hand with industry and academic institutions across the country. 

These strategic partnership coordinators conduct in-person classified and unclassified threat presentations and briefings, and it 

serves as an early referral mechanism for reports of possible economic espionage, theft of trade secrets, and cyber intrusions. 

Working through the more than 15,000 contacts nationwide, this 

program helps companies detect, deter, and defend against attacks 

of sensitive proprietary information from our foreign adversaries. 

The FBI takes seriously its role to investigate and apprehend 

targets pursuing economic espionage, and by forming close partnerships with local, logical businesses and academic and government 

institutions, the FBI wishes to have a greater impact on preventing 

and deterring the loss of trade secrets before any loss can actually 

occur. 

Thank you again for the opportunity to testify, and I look forward to answering any of your questions, sir. 
5 

[The prepared statement of Mr. Coleman appears as a submission for the record.] 

Chairman WHITEHOUSE. I would like to talk with you about a 

couple of things. 

First of all, have you any specific reaction to the draft legislation 

that Senator Graham and I circulated for discussion purposes? 

Mr. COLEMAN. Sir, I will stand on this: That any legislation that 

allows the FBI to have a better advantage at going after our foreign adversaries as it relates to economic espionage and theft of 

proprietary information, the FBI is in favor of. 

Chairman WHITEHOUSE. And presumably the people we are 

working with at the Department of Justice, do you support the—— 

Mr. COLEMAN. Yes, sir. 

Chairman WHITEHOUSE [continuing]. Arguments and points that 

they are making? 

Mr. COLEMAN. Absolutely. 

Chairman WHITEHOUSE. One of the things that I have observed, 

having watched this for a while, is that whenever I hear about a 

case that is brought for intellectual property theft, in every case 

that I have found so far there has been some nexus to old-fashioned type intellectual property theft—somebody taking the DVD 

home, somebody taking the patented item out of the factory. 

We have seen an explosion in pure cyber intrusions and extraction through the cyber network of intellectual property with no 

other technique involved. And to my knowledge, there have been 

no charges brought ever against anyone for that kind of activity. 

I understand that these cases are very complicated. I understand 

that they have huge forensic issues, that there is an overlay with 

national security and with the intelligence services that requires a 

lot of effort. I understand that some of the targets are overseas, 

and that creates a whole other array of legal and other issues. 

Trust me, having served as a United States Attorney, I can see 

how very challenging these cases are to make. But when you have 

General Alexander saying that we are on the losing end of the biggest transfer of wealth in human history, you would like to see a 

little bit more actual hard prosecution activity. 

Can you tell me what you think is behind that difficulty? And is 

there anything that we can do? Is it just a resource question? What 

can we do in Congress to start putting some points on the board 

against these people in criminal law courts? 

Mr. COLEMAN. Chairman, I think you described it to a T. Obviously when you get outside of the borders of the United States, in 

many of these investigations where there is a foreign nexus, our 

ability to conduct effective investigations is diminished greatly. 

I will tell you that we do have ongoing investigations that I 

would foresee as having a logical conclusion that I think you would 

agree that are as you described. In fact, the FBI has actually 

placed cyber assets and resources working with the counterintelligence resources at our National Cyber Intrusion Task Force that 

are working hand in hand and shoulder to shoulder on these specific investigations. 

So I think technology plays a critical role, and the advancement 

of technology makes the threat that much more complicated. But 

I think there has been tremendous progress made by the FBI along 
6 

with our partners at investigating these type of crimes, and so I 

am hopeful as we go forward that we will be able to demonstrate 

that we have been effective and will be effective in this arena. 

Chairman WHITEHOUSE. I would not want to suggest that the 

FBI has not been effective. I have been out to the NCIJTF. I have 

seen what you guys do out there. If I had to take my concern and 

turn it into just a single phrase, it would not be the FBI is not effective. It would be: The FBI is so busy trying to keep track of who 

is coming through the doors and coming through the windows and 

trying to warn all the companies that they are hacking into that 

there simply is a resource constraint in terms of taking all that effort, which could be devoted to tracking all these attacks and trying 

to help our businesses, there just is not the capability or enough 

capability to sit down and go through putting a prosecution package together, working it through the intelligence agencies, and 

doing all the other steps that need to be done. 

So in many ways, I am trying to throw you a friendly question 

saying let us help you do what needs to be done in terms of the 

resources. I would not want to take anybody off of what they are 

doing out at NCIJTF in order to put a prosecution package together. But at some point, we have to have a robust enough response to this problem as a country that we are starting to, for 

want of a better example, indict Chinese colonels and generals who 

are behind pulling this kind of thievery off. 

Mr. COLEMAN. I think another part of what I think is important—and you described it—is the threat is so immense that that 

is what makes this outreach effort so important to what we are 

doing and bringing in the private sector and the academic institutions to work hand in hand with us so we can actually try to get 

out in front of this threat. 

But you are absolutely right. The threat is so immense that the 

FBI cannot take this on alone, and whatever necessary help that 

we can get in those other industries and sectors is of great help to 

us. 

Chairman WHITEHOUSE. There is a provision in the last appropriations bill that requires the Department of Justice to do a report 

for us, looking forward, looking out a couple years, and thinking 

about what the structure should be like for addressing this particular threat. It has exploded, as you know. And it explodes even 

further every year. It grows just at massive levels. 

I am not convinced at this point that the present set-up makes 

sense. And if you look at another area that exploded, if you look 

at what happened when aviation began and what its effect was on 

the conduct of warfare, you started with the Army air effort as a 

subpart of the Signal Corps. And then it became a subpart of the 

Army, and it was not really until after World War II that you had 

a full-on U.S. Air Force. And since then we have been a very successful leader in that theater of military operations. But until then 

we really were not set up right. 

I am not convinced that we are set up right, and I would invite 

you to comment on this. But let me also ask it as a question for 

the record that you can take back to headquarters. How does it 

make sense to have these kind of cases, perhaps in your Counterintelligence Division, perhaps in the Cyber Division, perhaps in the 
7 

Criminal Division, how do you sort amongst those three Divisions 

to have this be efficient and smooth flowing? Because I understand 

that each of those different sections has a piece of this. 

Mr. COLEMAN. I think the first part of your comment is: Are we 

structured right? And I will tell you that I look at this on a daily 

basis. It is certainly a priority for our Director to look at are we 

efficiently and effectively addressing the threats. And I will tell you 

in the Counterintelligence Division, economic espionage has become 

a priority because of the expansion of the threat. 

So there are always ways that we are looking to better address 

this, and some of the more significant efforts that we have made 

is to really have outreach, and I cannot stress how important that 

is to this process and what benefits we have seen from that. 

We have expanded our contacts across the country to 15,000 contacts. We are conducting over 7,800 presentations and briefings a 

year. And we are starting to see—the maturity of these relationships is starting to pay off in the fact that companies are starting 

to come to us, academic institutions are actually coming to us early 

on and calling that contact so we can get engaged in the problem 

at the very early period, versus after a bad actor has left the company with two or three terabytes of information has already left. 

So that is absolutely a victory for us in this process, but we have 

a lot of room for improvement that we will continue to do. And we 

are always looking at ways to improve that. 

Chairman WHITEHOUSE. Well, in the context of that, if you could 

take it as a question for the record and get an official response 

from your organization, I am interested in whether you think, you 

know, five years out, 10 years out, that similar division across all 

those separate parts of the Bureau will continue to be a wise allocation or whether we are in sort of a transient step toward what 

ultimately will be the way we address this. 

Mr. COLEMAN. Yes, Mr. Chairman, I understand. 

Chairman WHITEHOUSE. Terrific. 

[The information referred to appears in Answers as a submission 

for the record.] 

Chairman WHITEHOUSE. Thank you for your service. I know that 

this is an immensely challenging area that calls on all sorts of different resources, and I am proud of the way the FBI conducts itself 

in this area, and I appreciate your service to our country. 

Mr. COLEMAN. Mr. Chairman, thank you very much for having 

me today. 

Chairman WHITEHOUSE. We will take a two-minute recess while 

the next panel gets itself sorted out and come back into action 

then. 

[Pause.] 

Chairman WHITEHOUSE. All right. The hearing will come back to 

order, and I thank the witnesses for attending and participating in 

this hearing. We have a terrific panel of witnesses, and I am delighted that you are all here. This is very promising. 

Peter Hoffman is the Vice President of Intellectual Property 

Management for The Boeing Company, which has plenty of intellectual property to manage. He has worked there since 1984. In his 

current role, he manages the company’s patent portfolio, protection 

of its trade secrets, and licensing of technical data images, con-
8 

sumer products trademarks, and patents. Prior to being appointed 

to his current position, Mr. Hoffman served as the Director of Global Research and Development Strategy for Boeing Research and 

Technology, which is the company’s advanced research organization. We welcome him, and why don’t you give your statement, and 

I will introduce and take the statement of each witness, and we 

will open it for questions after that. 

Please proceed, Mr. Hoffman. 

STATEMENT OF PETER L. HOFFMAN, VICE PRESIDENT, INTELLECTUAL PROPERTY MANAGEMENT, THE BOEING COMPANY, CHICAGO, ILLINOIS 

Mr. HOFFMAN. Good afternoon, Chairman Whitehouse. On behalf 

of The Boeing Company, I thank you for convening this hearing, 

and I am grateful for your leadership on efforts to improve trade 

secrets laws. It is a privilege to be a participant on this panel and 

provide Boeing’s view on the challenges faced by America’s 

innovators. 

Boeing first began making twin-float airplanes in 1915 from a 

small red boathouse in Seattle, and while much has changed since 

then, our company remains unique in that we assemble, test, and 

deliver most of our highly competitive products right here in the 

United States. The final assembly facilities for our commercial 

products are located in the States of Washington and South Carolina, but we have facilities for engineering and manufacturing of 

major components in multiple States, including Oregon, Florida, 

California, Montana, and Utah. Our defense and space-related production is primarily located in the States of California, Missouri, 

Pennsylvania, Texas, Arizona, Florida, and Alabama. 

Today, Boeing employs 160,000 people across the United States. 

Since 2005, we have created more than 15,000 new, high-paying 

jobs driven by our record backlog of over 5,000 commercial airplanes. Last year we paid $48 billion to more than 15,600 U.S. 

businesses, which collectively support an additional 1.5 million jobs 

across the country. 

Boeing’s significant contribution to the U.S. economy today, and 

for the past 100 years, is the result of the ingenuity of our highly 

skilled employees. Innovating each step of the way, they develop 

the most sought-after products and technologies in the world. 

Boeing’s cutting-edge technologies take years to develop at an enormous expense, approximately $3 billion of research and development spent per year, and the bulk of our innovations are protected 

as trade secrets. 

Because of this, trade secret protections are vital to securing 

Boeing’s intellectual property. Boeing does not simply have one recipe for its secret sauce; we have thousands of trade secrets that are 

critical to maintaining our unparalleled success. Unfortunately, 

Boeing’s valuable engineering and business information is at significant risk. Once publicly disclosed, rights in trade secrets may 

be lost forever, the investments wiped out in an instant along with 

the competitive advantage those trade secrets provided. 

Of course, Boeing is on constant guard to prevent the theft of our 

trade secrets, but today companies cannot simply lock their trade 

secrets in a safe. The vast majority of our business and engineering 
9 

information is stored electronically. The digital age has brought 

great gains in productivity but also has increased risk. At any moment we could lose a trade secret, through a breach in our network, through disclosure by one of our employees or partners, or 

through an escape at one of our many suppliers’ facilities. 

Fear of trade secret theft is not a concern just for Boeing. 

Middle- and small-size companies that rely on trade secrets have 

as much or more to fear as big companies, particularly if their survival depends on a single product or service. 

Given the risk U.S. companies face every day, more needs to be 

done to deter thieves from stealing our trade secrets. This theft is 

a crime, and we must send a clear message that we will not stand 

by as thieves harm our businesses, hurt our economy, and steal our 

jobs. Thus, we strongly support your efforts, Chairman Whitehouse, 

and also the efforts of Ranking Member Graham to call attention 

to the issue and to provide law enforcement with additional tools 

to deter trade secret theft. 

The Uniform Trade Secrets Act provides a general framework for 

State legislatures to adopt trade secret protections, but the standards and procedures adopted can vary from State to State, and jurisdictional issues may complicate matters further. As such, it is a 

real concern of U.S. companies that State action under the Uniform 

Trade Secrets Act may not, in some cases, be immediate enough to 

prevent the loss of a trade secret. 

So we also acknowledge the need for companies to have the ability to take immediate action of our own in Federal court to prevent 

the loss of our valuable trade secrets when State courts and Federal law enforcement cannot act quickly enough. 

Therefore, we would also like to thank Senator Coons and Senator Hatch for introducing the Defend Trade Secrets Act and your 

efforts to establish the right for a company to file an application 

in a Federal district court in order to seize property containing 

trade secrets stolen from a company. We look forward to working 

with Senator Coons and Senator Hatch on this bill and supporting 

your efforts to encourage the Congress to act quickly to pass this 

important legislation. 

We are also encouraged that the new laws under discussion, if 

passed, will strengthen overseas trade secret enforcement by raising awareness of the issue, promoting cooperation between U.S. 

and foreign law enforcement, and empowering our trade negotiators to encourage our trading partners to similarly raise the bar. 

In conclusion, we applaud your efforts to highlight this issue and 

to strengthen U.S. trade secret laws, and thereby help protect our 

valuable assets. 

Thank you for your time in hearing our concerns. 

[The prepared statement of Mr. Hoffman appears as a submission for the record.] 

Chairman WHITEHOUSE. Thank you, Mr. Hoffman. I appreciate 

your testimony. 

Our next witness is Pamela Passman, the president and CEO of 

the Center for Responsible Enterprise & Trade, also known as 

CREATe.org. CREATe is a global nongovernmental organization 

dedicated to helping companies and supply-chain members imple-
10 

ment leading practices for preventing corruption and protecting intellectual property. 

Prior to founding CREATe in October 2011, Ms. Passman was 

the corporate vice president and deputy general counsel for global, 

corporate, and regulatory affairs at Microsoft, where she had 

worked since 1996. And I have to say as a lawyer I am impressed 

by Microsoft’s legal shop, particularly the really path-breaking 

work that they did to go after spammers and people who are coming after them on the Net with civil theories that dated back to 

probably 15th century English common law. It was quite impressive to see such ancient doctrines applied to such a new problem, 

and I think the Microsoft complaints in that area have really set 

a model not only for the rest of the corporate sector in that area 

of law but even for government enforcement in that area of law. 

So you come from a good place, and welcome. 

STATEMENT OF PAMELA PASSMAN, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, CENTER FOR RESPONSIBLE ENTERPRISE & TRADE (CREATE.ORG), WASHINGTON, DC 

Ms. PASSMAN. Thank you very much, Chairman Whitehouse. 

Again, my name is Pamela Passman, and I am the CEO of the 

Center for Responsible Enterprise & Trade, CREATe.org. I appreciate the opportunity to testify. 

CREATe is a nonprofit dedicated to helping companies reduce 

corruption and intellectual property theft, including trade secret 

theft. We provide resources to companies large and small that help 

them assess their risks and develop strategies to protect their trade 

secrets and other IP assets, both within their organizations and in 

their supply chains. 

In today’s integrated, global economy, companies that succeed in 

turning their knowledge and know-how into competitive advantage 

are the ones that will create new jobs and drive economic growth. 

Increasingly, companies rely on trade secret laws to protect this 

knowledge. Yet the tremendous value of trade secrets also makes 

them prime targets for theft. 

CREATe recently teamed up with PricewaterhouseCoopers to assess the economic impact of trade secret theft and devise a framework for companies to mitigate threats. A copy of the CREATePwC report is attached to my written testimony. 

The report makes clear that the problem of trade secret theft is 

massive and inflicts material damage on the U.S. and other economies. If we are to energize our economy by enabling innovative 

companies to protect their trade secrets, we need to focus on two 

key goals. 

First, we need to incentivize companies to take proactive measures and implement best practices to secure their trade secrets on 

the front end, both within their own organizations and in their supply chains. 

Second, we need a consistent, predictable, and harmonized legal 

system to provide effective remedies when a trade secret theft has 

occurred. Trade secret theft occurs through many avenues, and 

companies need different tools and strategies to protect against 

each type of threat actor. 
11 

Businesses need to be particularly cognizant of risks that arise 

in their supply chains. The growth in recent years of extended global supply chains, comprising hundreds or even thousands of suppliers, has brought tremendous benefits and given many firms an 

enormous competitive edge. But companies using extended supply 

chains often must share confidential and highly valuable business 

information with their suppliers, which may be located in a different country with different laws and different corporate norms. 

In the face of this reality, it is absolutely essential that companies implement effective strategies to protect trade secrets not just 

within their own four walls, but with their suppliers as well. In the 

CREATe-PwC report, we recommend a five-step approach for safeguarding trade secrets and mitigating potential threats. 

We suggest that companies, one, identify and categorize their 

trade secrets; two, conduct a risk assessment; three, identify the 

most valuable trade secrets to their operations; four, assess the economic impact of losing those secrets; and, five, use the data collected to allocate resources and strengthen existing processes for 

protection. 

CREATe recently completed a pilot program with more than 60 

companies in countries around the world that helped them assess 

vulnerabilities and implement procedures to mitigate threats. 

Based on that pilot program, we just launched ‘‘CREATe Leading 

Practices,’’ a service designed to help companies improve and mature their management systems for IP protection and for 

anticorruption. 

Unfortunately, no amount of protection can completely safeguard 

all trade secrets from theft. Companies also need a legal system 

that provides predictable enforcement and meaningful remedies 

against bad actors. 

Recent high-profile criminal enforcement actions are promising, 

and I applaud you, Chairman Whitehouse and Ranking Member 

Graham, for your focus on law enforcement. I am also encouraged 

by the efforts of Senators Coons and Hatch to create a harmonized 

system for owners of trade secrets that will serve as a model 

around the world. 

The problem of theft that happens entirely overseas, highlighted 

by Senator Flake’s legislation, is worthy of further study. Governments and companies both play a role in improving protection for 

trade secrets. In our view, companies would benefit from taking a 

more proactive role in assessing vulnerabilities and employing best 

practices to manage their risks. They also need an effective legal 

system through which to enforce their rights when their know-how 

has been misappropriated. 

Thank you for holding this hearing and for giving me the opportunity to testify. I look forward to your questions. Thank you. 

[The prepared statement of Ms. Passman appears as a submission for the record.] 

Chairman WHITEHOUSE. Thank you, Ms. Passman. 

Our next witness is Drew Greenblatt, who is the president of 

Marlin Steel Wire Products in Baltimore. He has owned it since 

1998. The company exports baskets and sheet metal fabrications to 

36 countries and has been recognized as one of the 5,000 fastestgrowing companies in the United States for each of the last two 
12 

years. Mr. Greenblatt serves as an executive board member of the 

National Association of Manufacturers and as chairman of the 

boards of both the National Alliance for Jobs and Innovation and 

of the Regional Manufacturing Institute of Maryland. He is also a 

member of the Maryland Commission on Manufacturing Competitiveness as well as the Governor’s International Advisory Council. 

We welcome you here, Mr. Greenblatt. Please proceed. 

STATEMENT OF DREW GREENBLATT, PRESIDENT AND OWNER, 

MARLIN STEEL WIRE PRODUCTS, BALTIMORE, MARYLAND 

Mr. GREENBLATT. Thank you, Chairman Whitehouse, Senator 

Hatch, Members of the Subcommittee on Crime and Terrorism. 

Thank you for the focus on this critical challenge of trade secret 

theft and the opportunity to testify today. 

As you mentioned, my name is Drew Greenblatt. I am the president of Marlin Steel. We are based in Baltimore City. We are a 

leading manufacturer of custom wire baskets, wire forms, and precision sheet metal fabrications. We make everything in the USA. 

I am very proud to report that we also export to 36 countries, and 

my favorite country that we export to is China. We cater to the 

automotive, the medical, and pharmaceutical industries. 

I am here for three reasons. 

Number one, trade secrets are important not just for manufacturers that are big but also for small manufacturers like myself. 

Number two, America’s trade secret laws and policies must keep 

pace with today’s threats, which increasingly are not only interstate but are international threats. 

Number three, manufacturers need your help to effectively and 

efficiently protect and enforce trade secrets. We need to secure 

strong commitments in our trade agreements. 

Like so many other manufacturers, Marlin Steel competes in a 

global economy. We succeed through investing in ideas and innovations and the hard work of our dedicated employees. When I 

bought Marlin in 1998, we were a local business, and we made 

commodity bagel baskets—18 employees, $800,000 a year in sales. 

Last year we almost hit $5 million in sales, and we now have over 

24 employees. 

We are a proud member of the National Association of Manufacturers. We average about 40 employees in the National Association 

of Manufacturers, and we have 12,000 members. I am also the cofounder and chairman of the National Alliance for Jobs and Innovation. We have 380 members. 

Both NAM and NAJI are working hard to strengthen protection 

of trade secrets and intellectual property rights. We want to level 

the playing field for manufacturers and businesses throughout the 

United States. 

Trade secrets are more important than ever. They include things 

like drawings, proprietary manufacturing processes, software, formulas. All of these things are very valuable to the Nation—$5 trillion for public companies and even more when you include small 

companies. 

Small companies, our secret sauce is those trade secrets. That is 

our intellectual property. We leverage the expertise of our employees. At Marlin 20 percent of them are degreed mechanical engi-
13 

neers. They come up with specific client performance characteristics for our baskets that make us unique and different than our 

Chinese competitors. 

Some people think that almost three percent of our GDP is lost 

to these trade secrets being stolen. In our grandparents’ day, trade 

secrets were stolen by individuals who were across town that would 

steal some of the customer lists. Now it could be done on a thumb 

drive, and it could be sold to governments or Chinese companies 

across the world. 

These cyber incursions are very threatening to us. We have lasers in our factory, robots. If they could hack into our system, they 

could manipulate our equipment possibly and hurt our employees. 

That would be devastating to us. The thing I am most proud about 

is we have gone over 1,981 days without a safety incident. If some 

Chinese hacker or some foreign national were to be able to break 

into our system and manipulate our system, they could hurt our 

team. 

We are doing everything we can to harden our network. We 

spent so much money hardening our network that we could hire 

another unemployed steel worker to fill that job rather than spending all this money on these activities. 

The good news is Washington is starting to recognize this problem. We need Washington to do three things. 

First of all, we need you to have strong operational collaboration 

between the Federal agencies. We cannot have the silo approach 

we have right now. We need the FBI cooperating with the Justice 

Department, cooperating with Customs, cooperating with TSA. We 

all have to work together. 

Number two, we need access to Federal civil enforcement for 

trade secrets theft, well-conceived legislation like the Defend Trade 

Secrets Act recently introduced by Senator Coons and Senator 

Hatch. This is going to give us the ability to pursue people on the 

Federal level, not on the State level. 

Finally, we need to meet the global challenge of trade secret theft 

with global solutions, good trade agreements to stop these thefts. 

In conclusion, Chairman Whitehouse, Senator Hatch, trade secrets are vital for manufacturers small and large. America’s trade 

secret laws and policies much keep pace with today’s threats. Manufacturers need your help to ensure that they can effectively and 

efficiently protect and enforce their trade secrets. 

I applaud your attention to this critical challenge and your focus 

on solutions. With strong global partnerships and closer collaboration between Federal agencies and between government and business, and with the improvements to these U.S. laws, including Federal civil enforcement, we can have a real impact. We desperately 

need it now. 

Thank you for the opportunity to testify this afternoon. I look forward to answering your questions. Thank you. 

[The prepared statement of Mr. Greenblatt appears as a submission for the record.] 

Chairman WHITEHOUSE. Thank you, Mr. Greenblatt. 

Our final witness is Douglas Norman, the vice president and general patent counsel for Eli Lilly and Company. He serves as a 

member of the Board of Intellectual Property Owners Association 
14 

and as Chair of the National Association of Manufacturers’ Subcommittee for Intellectual Property. Mr. Norman has previously 

served as the 2002 co-chair of the Intellectual Property and Antitrust Task Force for the United States Council for International 

Business. 

Welcome, Mr. Norman. Please proceed. 

STATEMENT OF DOUGLAS K. NORMAN, VICE PRESIDENT AND 

GENERAL PATENT COUNSEL, ELI LILLY AND COMPANY, INDIANAPOLIS, INDIANA 

Mr. NORMAN. Good afternoon, Chairman Whitehouse, Mr. Hatch, 

and other Members of the Subcommittee. Thank you for the opportunity to testify today on an issue of great importance not only to 

my company—and not only to my industry—but to all segments of 

the American economy. 

Eli Lilly and Company was founded and is headquartered in Indianapolis, Indiana. On May 10th, just last Saturday, Lilly celebrated its 138th birthday as a U.S. company. Our mission at Lilly 

is to discover and develop medicines that help people live longer, 

healthier, and more active lives. Our major areas of innovation include therapies for cancer, diabetes, and mental illnesses. To fulfill 

this vision, Lilly must rely upon intellectual property protection 

that includes patents, trademarks, and trade secrets. Unfortunately, like too many of America’s leading innovator firms, Lilly 

has recently been the victim of trade secret theft. 

Lilly is a member of the Protect Trade Secrets Coalition, a crosssector group of companies that supports a harmonized Federal civil 

remedy for trade secret misappropriation. We are pleased to support the Defend Trade Secrets Act, S. 2267, which would accomplish 

this objective. We thank Senators Coons and Hatch for their leadership. And we are also encouraged by your work, Chairman 

Whitehouse and Ranking Member Graham, to ensure law enforcement has the tools it needs to prosecute trade secret theft. And we 

appreciate the effort by Senator Flake to highlight the continued 

problem of trade secret theft that occurs abroad. 

The bipartisan interest in trade secret protection evidenced by 

this Committee’s work is important to our shared objective of improving the effectiveness and efficiency of remedies against trade 

secret misappropriation. 

Trade secrets are an essential form of intellectual property and 

part of the backbone of our information-based economy. Whether 

you are a major pharmaceutical firm like Eli Lilly or a startup software company, your trade secrets are a big part of what sets you 

apart in the marketplace, and their protection is vitally important 

to maintaining a competitive edge and keeping workers on the job. 

Unfortunately, companies that are creating jobs in America are 

increasingly the targets of sophisticated efforts to steal proprietary 

information, harming our global competitiveness. 

Trade secrets are particularly vulnerable to theft given the rise 

in global supply chains and the rapid technological advances that 

have resulted in greater connectivity. A theft can come through 

cyber attack, voluntary or involuntary disclosure by an employee or 

by a joint venture partner. 
15 

The Economic Espionage Act makes the theft of trade secrets a 

Federal crime, and an array of State laws provide civil relief. The 

tools thieves use in their attempts to steal American trade secrets 

are growing more sophisticated by the day, however. Our laws 

must keep pace. 

The EEA as a criminal statute necessarily has limitations, but 

we very much appreciate the cooperation we get from Federal law 

enforcement. The FBI and the Department of Justice have limited 

resources at the time and would never be in a position to bring 

charges in all cases of interstate trade secret theft. State laws provide an important right for trade secret owners to bring a civil action for relief. 

State trade secret laws developed and made sense at a time 

when misappropriation was largely a local matter. But for companies that operate across State lines and have their trade secrets 

threatened by competitors around the globe, the array of State laws 

is inefficient and often inadequate. 

It is also inconsistent with how other forms of intellectual property are protected. Trade secret theft today is increasingly likely to 

involve the movement of the secret across State lines and require 

swift action by courts to preserve evidence that protect the trade 

secret from being divulged. This is particularly true when the theft 

is by an individual looking to flee the country. 

Once the trade secret has been divulged or is made known to a 

competitor, trade secret protection may be lost forever, and the 

harm from disclosure is very often irreparable. 

We are pleased that the Defend Trade Secrets Act would address 

these limitations and provide trade secret owners with the same 

ability to enforce their rights in Federal court as owners of other 

forms of intellectual property have. 

The breadth of support for the legislation—from companies focused on diverse areas such as software, biotechnology, semiconductors, medical devices, agriculture, and apparel—demonstrates the importance of a harmonized, Federal civil remedy. 

The companies that have already indicated their support for S. 

2267 often disagree on other areas of intellectual property protection, but we are united on this front. 

We also look forward to working with Chairman Whitehouse and 

Ranking Member Graham on ensuring law enforcement has the 

tools it needs to prosecute trade secret theft. Similarly, we look forward to working with Senator Flake and agree that it is important 

to study ways in which we can address overseas theft effectively. 

In conclusion, American companies are competing globally, and 

our know-how is subject to theft everywhere. A national solution 

that provides consistent and predictable trade secret protection and 

enforcement is, therefore, essential to our global competitiveness. 

The Defend Trade Secrets Act will establish the gold standard for 

national trade secret laws globally and serve as an important base 

for international harmonization efforts. We urge the Committee to 

consider this legislation and for all Senators to support it. 

Thank you again for the opportunity to testify today. I look forward to your questions. 

[The prepared statement of Mr. Norman appears as a submission 

for the record.] 
16 

Chairman WHITEHOUSE. Thank you, Mr. Norman. 

Let me welcome Senator Hatch and Senator Coons to the hearing, and before I turn to them for their questions, let me ask unanimous consent that Chairman Leahy’s statement be put into the 

record, which it will be without objection. 

[The prepared statement of Chairman Leahy appears as a submission for the record.] 

Chairman WHITEHOUSE. Let me ask each of you just very simply 

and quickly, using your own words and your own experience, explain what you think the scope is of this problem for our country 

and its industries, starting with Mr. Hoffman. 

Mr. HOFFMAN. It is a tremendously big problem for us as a company, and, I think, more broadly as an industry because so much 

of our intellectual property is protected as trade secrets. And right 

now, a lot of those are very vulnerable considering the changing 

landscape, the sophistication of the means by which our intellectual 

property and trade secrets can be obtained. So anything that helps 

to improve law enforcement’s ability to protect our trade secrets 

and allows us to be more secure in keeping those secrets so they 

are still valuable is very much appreciated by Boeing. 

Chairman WHITEHOUSE. Ms. Passman, from your experience the 

scope of the problem. 

Ms. PASSMAN. Well, with companies having almost 75 percent of 

their value in intangible assets like intellectual property, including 

trade secrets, the problem is quite significant. In the CREATe-PwC 

report, we attempted to put a figure to the magnitude of the problem, looking at the different threat actors that are involved, looking 

at the fact that U.S. companies, other advanced economies rely on 

distributed supply chains increasingly, and we looked at other illicit economic activity as a proxy for this, since it is a figure that 

is very difficult to get one’s arms around because companies themselves do not know the magnitude of the trade secrets they have 

as well as when there is a trade secret theft. 

We looked at other examples of illicit activity—corruption, money 

laundering, similar kinds of threat actors—and came to a figure of 

one to three percent of GDP. Quite significant. 

Chairman WHITEHOUSE. Thank you. 

Mr. Greenblatt, in your experience. 

Mr. GREENBLATT. This problem is out of control. We need your 

help. We are being attacked daily. What this will have, if we can 

get this legislation enacted, this will save jobs. In Baltimore City, 

unemployed steel workers will be employed. We are getting things 

stolen left and right. We need your help. 

Chairman WHITEHOUSE. And, Mr. Norman? Top that for clarity, 

by the way. 

[Laughter.] 

Mr. NORMAN. I will try to add some clarity myself. 

The issue is enormous. I could speak on behalf of pharmaceutical 

firms that spend billions of dollars every year doing research and 

development. As we move forward and try to develop new life-saving medicines, we continually build chemical platforms and pharmaceutical platforms in hopes of reaching a point where we can 

apply for patents. 
17 

What we are seeing are numerous instances where interlopers 

are stepping in and trying to steal our trade secrets on our formula 

prior to the time we can reduce those into a patent application. It 

very often may take two or three years or longer to do enough research to get to the single molecule that we think will be able to 

be carried on into clinical trials. 

If we lose the trade secrets and all of that formula prior to the 

time we can reduce that to a patent application, the loss is irrevocable. So we may spent $10, $20, $30 million building a chemical 

platform, a rich diversity of a number of compounds, and if any one 

of those is stolen from us prior to the time that we can obtain a 

patent on it, then it is lost forever. And, therefore, the public—no 

citizen gets the ability to enjoy the fruits of that research once it 

is gone. 

Chairman WHITEHOUSE. Thank you very much. 

Senator Hatch. 

Senator HATCH. Thank you, Mr. Chairman. 

Chairman WHITEHOUSE. And I should say both to you and Senator Coons that before you got here, your names were sung with 

praise over and over again for the legislation. It was almost as if 

you were summoned here by those voices. 

Senator HATCH. That is always unusual. 

[Laughter.] 

Senator HATCH. We are happy to have all of you here. You are 

all experts in your field, and let me just ask Mr. Norman and Mr. 

Hoffman to respond to this one. Under U.S. law, protections for 

trade secrets are already some of the most robust in the world, and 

we are hoping to make those protections even stronger. But protecting trade secrets in numerous countries is a challenge, it seems 

to me, facing many transnational companies, something I am very 

concerned about. 

Now, Mr. Norman and Mr. Hoffman, how will changes we make 

to U.S. law have an impact, either positive or negative, on what 

other countries are doing in this area? And do we need to be careful here? Mr. Norman, you can go first. 

Mr. NORMAN. Sure. Thank you again, Senator Hatch, for the legislation that you have introduced. We greatly appreciate it. We 

greatly appreciate your leadership. 

The instances of what it would do on a positive standpoint is that 

we believe the legislation to obtain a Federal trade secret remedy, 

particularly the ability to seek an ex parte seizure of stolen materials and prevent further disclosure or divestment of that information broadly, would be a very positive gold standard for future discussions on harmonization of trade secret laws around the world 

with our major trading partners. 

It is important, I believe, to get beyond the State trade secrets 

laws, which are often a bit unwieldy and difficult to enforce across 

State lines simply because the procedures are not always set up to 

work very well along those lines. But with a Federal standard, with 

the appropriate kind of ex parte control, I believe we can show the 

rest of the world what the gold standard would look like as far as 

giving us the rights on our own to take a private civil action and 

protect our trade secrets. 

Senator HATCH. Well, thank you. 
18 

Mr. NORMAN. Thank you. 

Senator HATCH. Mr. Hoffman, do you care to add anything? 

Mr. HOFFMAN. Yes. I fully agree with my colleague. Any opportunity for our trade negotiators to be able to point to improvements 

in trade secret laws in the United States to help strengthen the 

laws outside of our borders, for global companies such as ours, will 

be very helpful to protecting our trade secrets. 

Senator HATCH. Okay. Let me ask a question for the whole 

panel, and that is, trade secrets also seem to be a lot more difficult 

to protect than patents. I understand that there may be industry 

best practices and model policies, but I imagine that these vary 

widely based on the industry and type of process or information 

that you are trying to protect. So I am very interested in, as a practical matter, how do you determine what measures are reasonable 

to protect your trade secrets. Mr. Hoffman. 

Mr. HOFFMAN. Well, when it comes to trade secret versus patent, 

we actually base that decision upon the reverse engineering ability 

of the innovation. But once we decide to go the trade secret route, 

we have to have the processes and the systems in place in order 

to assure that those trade secrets are secure. And as mentioned 

previously, 60 percent of what we sell we buy from others, so the 

sharing of our intellectual property across our supply chain domestically and internationally is an area we are going to have to be 

very careful that they have the same type of procedures in place 

that will protect our intellectual property at the same level. 

Senator HATCH. Okay. Yes. 

Ms. PASSMAN. In our work with companies around the world, we 

have found that this is something that is not very mature inside 

their businesses or with their supply-chain partners. So in the 

CREATe work with PwC, we laid out a five-step framework for 

companies to begin to get their arms around how to best manage 

their intellectual property. And, really, first being able to identify 

and categorize what you have and where it is in a company is critical, whether you are a small company or a large company that has 

global operations. 

We also recommend that companies conduct a risk assessment 

and identify who are the primary threat actors, who is interested 

in their trade secrets, in their intellectual property, and their potential vulnerabilities in their policies, in their procedures, in their 

internal controls, really looking inside of their company and in 

their supply chain; and also identify those trade secrets that would 

have the greatest impact on the company’s operations and business; also looking at the economic impact of a loss of a trade secret, 

understanding the magnitude that that will have on their business; 

and, finally, taking all of this information and allocating resources 

to better protect your trade secrets, thinking of it as an investment, 

not just a cost. 

Senator HATCH. My time is up, Mr. Chairman. 

Chairman WHITEHOUSE. Senator Coons. 

Senator COONS. Thank you, Senator Whitehouse. I would like to 

thank you for chairing this hearing and for the great work that you 

and Senator Graham have done to make sure that we protect 

America’s intellectual property. 
19 

We have heard from an array of witnesses today the compelling picture of what is really at stake here: Up to $5 trillion of value 

held in America’s intellectual property and, in particular, in the 

form of trade secrets. We have criminal law prosecutions for the 

protection of trade secret theft. The Economic Espionage Act is a 

good platform, a good beginning. But as we have heard from you 

today as witnesses, there are significant gaps, and I applaud the 

Chair today, Senator Whitehouse, and Senator Graham for their 

hard work in improving efforts to deal with that. 

The Department of Justice has many priorities and limited resources, and so it is unsurprising to me that there were just 25 

trade secret cases brought last year. Before he leaves, I need to say 

my profound personal thanks to Senator Hatch for being a great 

partner and a good leader on this issue. 

Senator HATCH. Well, same here. This young man has really 

done a very good job on this, and we hope we can get this through 

for you. 

Chairman WHITEHOUSE. You even got a ‘‘young man’’ out of it. 

[Laughter.] 

Senator HATCH. I should refer to you as one, too. 

Senator COONS. As a former intern for this Committee, I will say 

that I never imagined there would be a day when Senator Hatch 

would be patting me on the shoulder and saying, ‘‘I look forward 

to passing a bill with this nice young man.’’ 

[Laughter.] 

Senator COONS. When at the time I was mostly passing cups of 

coffee. 

It is a tremendous sense of satisfaction that I have gotten 

through working with Senator Hatch and with Eli Lilly and a number of other companies represented here today, and I am grateful 

to the National Association of Manufacturers and the Coalition for 

the Protection of Trade Secrets, and the Protect Trade Secrets Coalition for their very able and valued input as we have crafted this 

bill and tried to get to a place that makes sense, and that can help 

stem the gap in U.S. law to ensure that we really vigorously defend 

trade secrets. 

Let me ask a series of questions quickly of the panel, if I might, 

before I run out of time. First, if I might, Mr. Hoffman, Boeing does 

business globally, as your testimony thoroughly demonstrates. 

Most of the significant threats to U.S. trade secrets today originate 

from other countries around the world. Can you speak to how respect for trade secret theft varies around the world and how our 

laws domestically and what we might enact in terms of measures 

to strengthen our domestic laws could then influence the protection 

of U.S. IP internationally? 

Mr. HOFFMAN. I would be glad to, and thank you for the question, Senator Coons. 

When you look at trade secret theft, regardless of whether it is 

coming from domestic or international threats, it hurts Boeing and 

it hurts other companies. But I think the best thing we can do as 

a country is to set the standard and provide the tools necessary for 

efficient and effective protection of our trade secrets and give those 

standards to our trade negotiators to press the issue with our counterparts. 
20 

Senator COONS. I could not agree more, and I appreciate that response. 

If I might, Mr. Greenblatt, for Marlin Steel, an admirable small 

manufacturer that has grown significantly under your leadership, 

trade secret theft can impose an existential threat. If a thief succeeds in stealing, as you put it, your secret sauce, it can literally 

mean the end of the business in your case, very harmful to Eli Lilly 

or Boeing or Microsoft or others, but for a firm like Marlin Steel, 

a loss of trade secrets could literally mean the end. And securing 

your trade secrets and then asserting your rights in court can also 

be significantly expensive relative to the size of your business, and 

I saw this in my own experience as in-house counsel for a manufacturing firm. 

Can you speak to how the existence of a Federal private right of 

action would reduce the cost of protecting your trade secrets and 

how having one uniform Federal standard might strengthen your 

ability to go after those who would steal your trade secrets? 

Mr. GREENBLATT. The Defend Trade Secrets Act is very well 

crafted. It is going to help us go around the State system, which 

is very inefficient, it is very slow, and it is very expensive. Little 

companies cannot afford having lawyers in five different States on 

retainers trying to go after a bad actor. It would be much more elegant if we could have a Federal jurisdiction on this matter. It 

would be much more efficient. The Coons-Hatch bill, your bill, 

would tremendously accelerate our ability to stop bad actors and 

get good results. 

Senator COONS. Thank you. If I might, Mr. Chairman, one last 

question of Mr. Norman. 

Mr. Norman, just thank you again for your hard work and leadership, and in particular, one of the sections we worked on was the 

ex parte injunctive relief. If you would, explain why an authority 

like that is particularly important to Eli Lilly or to other companies 

facing trade secret theft. 

Mr. NORMAN. Yes, sir. We often run into situations where we 

find that an ex-employee has left and is going to work for a competitor, and we find out something such that once they turn in their 

Lilly-issued computer, there has been a download of a number of 

documents which contain highly confidential Lilly trade secrets. 

These occurrences almost always happen on a late Friday afternoon, and, therefore, the best part, I believe, about the ex parte seizure aspect of the bill that is currently pending is the fact that we 

could go to Federal court and in one action kick out an ounce of 

prevention rather than worrying about a pound of cure a week or 

two later, when we can get the Indiana State courts involved or the 

New Jersey State courts involved or perhaps both the Indiana and 

New Jersey State courts involved, leading to a whole lot more expense if we have to go through State court, a whole lot more risk 

because we may not be able to isolate and seize the stolen materials as quickly; and, therefore, a Federal cause of action where we 

can go to a single court and institute the power of the Federal 

court system to seize stolen materials would be extraordinarily 

helpful in those situations. And I thank you for your leadership on 

this bill. 
21 

Senator COONS. Well, thank you, Mr. Norman. And, Ms. 

Passman, for your estimate, if my math is right, that is $150 to 

$450 billion a year, trade secret theft is a big deal. Senator 

Whitehouse, Senator Graham, your leadership in strengthening the 

criminal law protections for American companies is admirable, and 

I very much look forward to working with you to pass these two 

bills in tandem in a way that can strengthen the differences for the 

inventions and innovations of millions of Americans and thousands 

of companies. 

Thank you, Senator. 

Chairman WHITEHOUSE. Thank you. 

And now our distinguished Ranking Member, Lindsey Graham. 

Senator GRAHAM. Thank you, Mr. Chairman. 

We seem to have two challenges: Protecting the Nation against 

what I think is an inevitable cyber attack on a large scale that is 

coming. The question is: Will we do something about it in time to 

diminish the effect? That is one problem the Nation faces from 

criminal terrorist enterprises and potentially nation states. 

The other is the private sector trying to do business in a very 

interconnected, complicated world, and one of the things that 

America always has had going for her is that we are pretty innovative and we are always thinking outside the box, and other people 

are pretty good at copying. 

From a criminal point of view, we are trying to put teeth into 

this area of the law. Mr. Hoffman, when you are overseas representing Boeing or trying to do a joint venture, what do you worry 

about the most? Some countries require you to have a 51-percent 

partner. Is that correct? 

Mr. HOFFMAN. It varies by country, but in some cases you can 

have a majority share—in some cases you can have a minority 

share. 

Senator GRAHAM. But you will have a forced partnership based 

on the host country’s laws. 

Mr. HOFFMAN. Whatever the laws are, it typically is some type 

of partnership, yes. 

Senator GRAHAM. Okay. Well, these partnerships are created by 

the host country, not at your own choosing. I guess you can choose 

who to partner with, but to do business in that country, you have 

got to have a local partner, for lack of a better term. 

Mr. HOFFMAN. In general, yes, sir. 

Senator GRAHAM. How does the private sector and the Government interact when there is a trade secret theft or intellectual 

property theft in a foreign country? What more can we do? And 

how does that system work? 

Mr. HOFFMAN. I am not an expert in those areas, but I can tell 

you that we are a very globally spread company, and when we 

make the decision to go into a country and do business, we study 

the laws and how we need to establish ourselves as a business and 

are prepared to defend our trade secrets as best we can, knowing 

that it is going to be a very different environment than we have 

here at home, in some cases. 

Senator GRAHAM. Mr. Norman, when you do business overseas 

and you have a local partner, what is your biggest concern? 
22 

Mr. NORMAN. The biggest concern, of course, is losing our trade 

secrets, losing the value of all the investment that we put in—— 

Senator GRAHAM. Having a company across the street from 

where you locate doing exactly the same thing you are doing? 

Mr. NORMAN. Right. That is always an issue, and, therefore, we 

are quite circumspect about the type of research, development, or 

disclosure that we make in many of the partnered institutions 

where we do business outside the United States. 

Senator GRAHAM. And if we had laws on our books that would 

hold a country or an individual acting on behalf of a nation state 

liable for engaging in that kind of theft, do you think it would 

make doing business easier overseas? 

Mr. NORMAN. I believe it would, if we can use that as the standard by which we can get other countries to change their laws and 

more harmonize them with the appropriate way that we would like 

to see trade secrets protected, yes. 

Senator GRAHAM. Mr. Hoffman, is it fair to say that in the international arena, when it comes to protecting intellectual property, 

trade secrets, in many countries it is the ‘‘Wild, Wild West’’? 

Mr. HOFFMAN. There is definitely different threat levels out 

there, and I agree with my colleagues that we choose carefully 

about what type of work and what type of intellectual property we 

do outside the United States. 

Senator GRAHAM. And the more we could get this right, the more 

opportunity to create jobs here at home and abroad. Is this an impediment to job creation? 

Mr. NORMAN. I believe any time we lose the fruits of the labors 

that our scientists and engineers put into developing drug products, it is a huge jobs issue. We employ thousands of scientists and 

engineers who will work years trying to develop a drug product, 

and if a competitor can step in and take that away from us right 

before we cross the finish line, it is devastating. 

Senator GRAHAM. Well, I just want to thank Chairman 

Whitehouse. I have never known anyone more knowledgeable about 

the subject matter and who had a real zeal to do something about 

it, so I look forward to seeing if we can get our bill over the finish 

line here. 

Chairman WHITEHOUSE. It has been a pleasure working with 

Senator Graham on a variety of cyber issues, and I thank him for 

his leadership. 

Senator Flake, the floor is yours. 

Senator FLAKE. Thank you, Mr. Chairman. And thank you for 

being here. I apologize for not being here earlier, and I hope I am 

not plowing old ground here. 

But I am concerned about the rate at which trade secrets are 

being stolen, internationally on a foreign basis as opposed to domestically, and let me get some sense of that. I have introduced 

legislation, the Future of America Innovation and Research Act, the 

FAIR Act, which allows the owner of a trade secret to bring civil 

action in Federal court against the person who stole the trade secret if the bad actor is located abroad or acting on behalf of a foreign entity. 

Ms. Passman, there was a recent report by CREATe.org that 

cited a survey of U.S. firms that were asked to report on suspected 
23 

successful or unsuccessful attempts to compromise trade secrets information. Of the incidents where the nationality of the primary 

beneficiary of the theft was known, 70 percent of the time it was 

foreign individuals, firms, or governments that were those beneficiaries. 

Do you see this as a growing problem, the foreign nature of the 

threat? 

Ms. PASSMAN. Well, certainly in an integrated economy with very 

distributed global supply chains, we are going to increasingly see 

the challenge with the trade secrets. You know, American companies benefit from having participated in these global supply chains, 

and as they move their business overseas, whether it is a supplier 

overseas or a customer overseas, they need to understand the global environment in which they are working. 

We are working with companies around the world, including with 

companies in China and other emerging markets, that also want to 

mature their systems and better protect intellectual property. 

But, you know, we advise companies to understand the environment that they are entering and to put business processes in place 

to better protect and manage their intellectual property inside of 

their business as well as with their supply chain. 

Senator FLAKE. Well, thank you. 

Mr. Hoffman, in your testimony you note that one of the few 

cases DOJ has prosecuted under Section 1831 was against a defendant who stole trade secrets from Boeing related to the Space 

Shuttle and the Delta IV rocket to benefit a foreign entity. Are you 

are also seeing an uptick in this foreign activity? 

Mr. HOFFMAN. With that particular case, the gentleman was 

charged with stealing our trade secrets. There was no particular 

focus on what happened to those secrets. In fact, once a secret escapes, of course, the damage has been done. I might defer to our 

Department of Justice colleagues regarding those issues. 

Senator FLAKE. All right. What is Boeing specifically doing to 

combat this? What measures have you taken? Sorry, again, if I am 

plowing old ground here. 

Mr. HOFFMAN. In terms of our overseas presence, we hold our 

subsidiaries and our relationships with partners to the same level 

we have in the United States. The complexities are that we are in 

a different country and we have to adhere to their laws, and they 

may not be as harmonized with ours and as effective as ours. 

Senator FLAKE. Do you think it is important to have legislation 

that protects companies against domestic and foreign trade secret 

theft? Do all of you agree with that? All right. Good. We will proceed with the legislation. I appreciate—— 

Chairman WHITEHOUSE. Everybody nodded, let the record reflect. 

Senator FLAKE. Okay. If you could do that more audibly next 

time, that would be great. 

Thank you for your testimony. 

Chairman WHITEHOUSE. Let me ask one last, or maybe two last, 

questions of everybody. 

There has been some reluctance on the part of corporate victims 

of trade secret theft to engage in the criminal law enforcement 

process, and one of the things that we have heard has been that 

taking that step rather than just simply trying to bury things could 
24 

actually make matters worse as the trade secret rattled around 

through the case and became more public and further compromised 

the company’s secrecy and its advantage. 

Is that something that is a real concern? Are there any other 

concerns that we should be looking at in terms of things having to 

do with the process of a criminal case that are deterring criminal 

victims from taking advantage of that means of redress? Mr. Norman. 

Mr. NORMAN. Yes, Chairman Whitehouse, that is very much a 

deep concern that we have as we look at the question of criminal 

prosecution arising from a disclosure of trade secrets outside the 

bounds of our corporate entity. And I applaud you particularly for 

the language that you have in your legislation concerning the ability to protect a trade secret even during the time that the court is 

reviewing, because it is often difficult to question witnesses, it is 

very difficult to come forward with documentation, it is very difficult to seek expert testimony that can help prove that a theft has 

occurred if you cannot talk about specifically in open court what 

the means of the disclosure was or what the subject matter of the 

disclosure was. Because once it has made its way into open court, 

it is no longer a trade secret and you lose it anyway. 

And so many of the mechanisms that have been proposed—and 

the mechanism in particular that I have seen in your legislation, 

I believe, is a great leap forward in helping us move into an arena 

where we could help prosecute these cases much more readily than 

we have been able to in the past, and I thank you for that. 

Chairman WHITEHOUSE. A final question for Mr. Greenblatt. You 

indicated earlier that one of the things that we as Senators should 

focus on is improving coordination among the agencies. You used 

the term ‘‘silos.’’ When I go out to the unofficially termed ‘‘fusion 

centers,’’ if you will, where the FBI, for instance, leads one, or 

Homeland Security, they have got all the agencies there. They have 

got everybody represented. It is all up on screens. It looks like a 

model of interagency cooperation, at least at that level. Obviously, 

you had a different experience down at the level of the attacks on 

your company and the experience that you had. Could you articulate more specifically exactly what your concerns were about the 

silo problem and the problems of coordination? 

Mr. GREENBLATT. So, for example, if we identify, if the FBI identifies a bad actor, we would like that that company cannot import 

things into America and the Customs agency halts their products 

from coming into America. The only way we are going to get their 

attention is by the wallet, and if we could stop them from shipping 

into the greatest, biggest economy in the world, we will get their 

attention. 

Chairman WHITEHOUSE. Okay. So your experience was not that 

on the investigative side there was discoordination; rather, that 

when a case is done, you should be able to have as a remedy that 

the company does not get to import goods, it is an additional penalty for them? 

Mr. GREENBLATT. Precisely. And we just want everybody to work 

together and quickly resolve these topics, and we just cannot have 

each agency in their own little zone. We have to have everybody 

working together and collaborate as much as possible. And then we 
25 

have to stop these bad actors from bringing their parts into America. 

Chairman WHITEHOUSE. All right. Well, let me thank all of the 

witnesses for coming in. This is a very helpful process for us. We 

have a lot of things going for us with this legislation. For one thing, 

it is a real issue that is causing Americans to be hurt in very concrete and meaningful ways. 

Second, as you have seen today, it could not be more bipartisan, 

so I do not see us getting dragged into the partisan turmoil. We 

are following regular order and having proper hearings and so 

forth so that we can pull this together and move it forward. But 

I hope very much that we will be able to make progress. And the 

advice and the counsel of all of you who are here, some of whom 

have been very helpful in the preparation of the legislation as well 

as in testimony about it, is something that we are all very grateful 

for. I think Senator Flake, Senator Hatch, Senator Coons, Senator 

Graham, and myself have all put considerable effort into trying to 

address different aspects of this problem, and I am confident that 

we will all continue to work together to try to solve this problem 

so that you have one less thing to worry about and you can focus 

your considerable skills on making the best products in the world 

and expanding your businesses. 

Thank you very much. The hearing record will stay open for an 

additional week for anybody who wishes to add anything, but subject to that, we are adjourned. 

[Whereupon, at 3:56 p.m., the Subcommittee was adjourned.] 

(27) 

A P P E N D I X 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
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PREPARED STATEMENT OF CHAIRMAN PATRICK LEAHY
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PREPARED STATEMENT OF CHAIRMAN SHELDON WHITEHOUSE
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PREPARED STATEMENT OF RANDALL C. COLEMAN
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PREPARED STATEMENT OF PETER L. HOFFMAN
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PREPARED STATEMENT OF PAMELA PASSMAN
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PREPARED STATEMENT OF DREW GREENBLATT
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PREPARED STATEMENT OF DOUGLAS K. NORMAN
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QUESTIONS SUBMITTED TO RANDALL C. COLEMAN

BY SENATOR WHITEHOUSE
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QUESTIONS SUBMITTED TO PETER L. HOFFMAN BY SENATOR FLAKE
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QUESTIONS SUBMITTED TO DOUGLAS K. NORMAN

BY SENATOR FLAKE
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QUESTIONS SUBMITTED TO PAMELA PASSMAN BY SENATOR FLAKE
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RESPONSES OF RANDALL C. COLEMAN TO QUESTIONS SUBMITTED

BY SENATOR WHITEHOUSE
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RESPONSES OF PETER L. HOFFMAN TO QUESTIONS SUBMITTED

BY SENATOR FLAKE
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RESPONSES OF DOUGLAS K. NORMAN TO QUESTIONS SUBMITTED

BY SENATOR FLAKE
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RESPONSES OF PAMELA PASSMAN TO QUESTIONS SUBMITTED

BY SENATOR FLAKE

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