II

104TH CONGRESS

2D SESSION S. 1525

To amend title 18 of the United States Code to prevent economic espionage

and to provide for the protection of United States proprietary economic

information in interstate and foreign commerce, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 25, 1996

Mr. COHEN introduced the following bill; which was read twice and referred

to the Committee on the Judiciary

A BILL

To amend title 18 of the United States Code to prevent

economic espionage and to provide for the protection

of United States proprietary economic information in

interstate and foreign commerce, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Economic Espionage

5 and Protection of Proprietary Economic Information Act

6 of 1995’’.

7 SEC. 2. FINDINGS AND PURPOSE.

8 (a) FINDINGS.—Congress finds that—
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1 (1) sustaining a healthy and competitive na2 tional economy is imperative to maintaining the se3 curity of the Nation;

4 (2) the development and production of propri5 etary economic information is an integral part of vir6 tually every aspect of United States trade, com7 merce, and business;

8 (3) the development, production, protection,

9 and lawful exchange, sale, and transfer of propri10 etary economic information is essential to maintain11 ing the health and competitiveness of critical seg12 ments of United States business and industry, and

13 hence to the national economy and the national se14 curity;

15 (4) much proprietary economic information

16 moves in interstate and foreign commerce, and pro17 prietary economic information that does not move in

18 interstate or foreign commerce directly affects that

19 which does;

20 (5) the theft, misappropriation, and wrongful

21 receipt, transfer, exchange, and use of stolen or mis22 appropriated proprietary economic information by

23 foreign governments and their agents or instrumen24 talities costs the United States Government and
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1 United States firms, businesses, industries, and con2 sumers millions of dollars each year;

3 (6) the theft, misappropriation, and wrongful

4 receipt, transfer, and use of proprietary economic in5 formation belonging to the United States Govern6 ment and United States firms, businesses, and in7 dustry by foreign governments and their agents or

8 instrumentalities directly and substantially threatens

9 the health and competitiveness of critical segments

10 of the United States economy and, consequently, the

11 Nation’s security; and

12 (7) enforcement of existing State laws protect13 ing proprietary economic information is frustrated

14 by the ease with which stolen or wrongfully appro15 priated proprietary economic information is trans16 ferred across State and national boundaries.

17 (b) PURPOSES.—

18 (1) PRIMARY PURPOSE.—The primary purpose

19 of this Act is to protect the national security by pre20 venting economic espionage and furthering the devel21 opment and lawful use of United States proprietary

22 economic information by protecting it from theft,

23 wrongful destruction or alteration, misappropriation,

24 and conversion by foreign governments and their

25 agents or instrumentalities. This Act is intended to
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1 protect the proprietary economic information of the

2 United States Government and United States firms,

3 businesses, industries, and individuals both domesti4 cally and abroad by punishing individuals, corpora5 tions, and institutions which engage in economic es6 pionage with the intent or purpose of aiding foreign

7 nations or governments and their instrumentalities.

8 (2) SECONDARY PURPOSE.—The secondary pur9 pose of this Act is to affirm that proprietary eco10 nomic information is included in the term ‘‘goods,

11 wares, or merchandise’’ as that term is used in Fed12 eral laws relating to stolen property.

13 SEC. 3. PREVENTION OF ECONOMIC ESPIONAGE AND PRO14 TECTION OF PROPRIETARY ECONOMIC IN15 FORMATION IN INTERSTATE AND FOREIGN

16 COMMERCE.

17 (a) ECONOMIC ESPIONAGE.—Part I of title 18, Unit18 ed States Code, is amended by adding after chapter 27

19 the following new chapter:

20 ‘‘CHAPTER 28—ECONOMIC ESPIONAGE

21 AND PROTECTION OF PROPRIETARY

22 ECONOMIC INFORMATION

‘‘Sec.

‘‘570. Definitions.

‘‘571. Engaging in economic espionage to aid foreign governments, corporations,

institutions, or instrumentalities.

‘‘572. Vicarious liability.

‘‘573. Forfeiture.

‘‘574. Extraterritoriality.
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‘‘575. Construction with other laws.

‘‘576. Preservation of confidentiality.

‘‘577. Nonapplicability to lawfully authorized law enforcement or intelligence activities.

1 ‘‘§ 570. Definitions

2 ‘‘As used in this chapter:

3 ‘‘(1) The term ‘foreign corporation, institution,

4 or instrumentality’ means any corporation, agency,

5 component, institution, association, instrumentality,

6 or legal, commercial, or business entity that is sub7 stantially owned, controlled, sponsored, commanded,

8 managed, patronized, dominated, or chartered by a

9 foreign government or subdivision of a foreign gov10 ernment.

11 ‘‘(2) The term ‘foreign agent’ means any offi12 cer, employee, proxy, servant, delegate, or represent13 ative of a foreign nation or government.

14 ‘‘(3) The term ‘person’ means a natural person,

15 corporation, agency, association, institution, or any

16 other legal, commercial, or business entity.

17 ‘‘(4) The term ‘proprietary economic informa18 tion’ means all forms and types of financial, busi19 ness, scientific, technical, economic, or engineering

20 information including, but not limited to data, plans,

21 tools, mechanisms, compounds, formulas, designs,

22 prototypes, processes, procedures, programs, codes,

23 or commercial strategies, whether tangible or intan-
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1 gible, and whether stored, compiled, or memorialized

2 physically, electronically, graphically, photographi3 cally, or in writing provided that:

4 ‘‘(A) the owner thereof has taken reason5 able measures to keep such information con6 fidential; and

7 ‘‘(B) the information is not available gen8 erally to, or accessible by, the public.

9 ‘‘(5) The term ‘owner’ means the United States

10 person or persons in whom, or United States Gov11 ernment component, department, or agency in

12 which, rightful legal, beneficial, or equitable title to,

13 or license in, proprietary economic information is

14 reposed.

15 ‘‘(6) The term ‘United States person’ means—

16 ‘‘(A) in the case of a natural person, a

17 United States citizen or permanent resident

18 alien; and

19 ‘‘(B) in the case of a non-natural person,

20 an entity substantially owned or controlled by

21 the United States Government or by United

22 States citizens or permanent resident aliens, or

23 incorporated in the United States.
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1 ‘‘§ 571. Engaging in economic espionage to aid for2 eign nations governments, corporations,

3 institutions, or instrumentalities

4 ‘‘(a) Any person who, with intent to, or reason to be5 lieve that it will injure or disadvantage any owner and ben6 efit or advantage any foreign nation, government, corpora7 tion, institution, or instrumentality who—

8 ‘‘(1) steals, wrongfully appropriates, takes, car9 ries away, or conceals, or by fraud, artifice, or de10 ception obtains proprietary economic information;

11 ‘‘(2) wrongfully copies, duplicates, sketches,

12 draws, photographs, downloads, uploads, alters, de13 stroys, photocopies, replicates, transmits, delivers,

14 sends, mails, communicates, or conveys proprietary

15 economic information;

16 ‘‘(3) being entrusted with, or having lawful pos17 session or control of, or access to, proprietary eco18 nomic information, wrongfully copies, duplicates,

19 sketches, draws, photographs, downloads, uploads,

20 alters, destroys, photocopies, replicates, transmits,

21 delivers, sends, mails, communicates, or conveys the

22 same;

23 ‘‘(4) receives, buys, or possesses proprietary

24 economic information, knowing the same to have

25 been stolen or wrongfully appropriated, obtained, or

26 converted;
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1 ‘‘(5) attempts to commit any offense described

2 in paragraph (1), (2), (3), or (4);

3 ‘‘(6) wrongfully solicits another to commit any

4 offense described in paragraph (1), (2), (3), or (4);

5 or

6 ‘‘(7) conspires with one or more other persons

7 to commit any offense described in paragraph (1),

8 (2), (3), or (4), and one or more of such persons do

9 any act to effect the object of the conspiracy,

10 shall, except as provided in subsection (b), be fined not

11 more than $1,000,000, imprisoned not more than 25

12 years, or both.

13 ‘‘(b) Any corporation that commits any offense de14 scribed in subsection (a) shall be fined not more than

15 $50,000,000.

16 ‘‘§ 572. Vicarious liability

17 ‘‘Any officer, director, manager, or other person occu18 pying a position of authority and responsibility for the ac19 quisition, use, or management of proprietary economic in20 formation for any corporation or other business or com21 mercial entity who—

22 ‘‘(1) knows or has reason to know that agents

23 or employees of the corporation or entity have

24 wrongfully acquired or manipulated proprietary eco25 nomic information in violation of section 571(a); and
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1 ‘‘(2) directly or indirectly authorizes, permits,

2 or suffers the information wrongfully acquired or

3 manipulated to be used to injure or disadvantage

4 any owner and benefit or advantage any foreign na5 tion, government, corporation, institution, or instru6 mentality,

7 shall be fined not more than $5,000,000, imprisoned not

8 more than 25 years, or both.

9 ‘‘§ 573. Forfeiture

10 ‘‘(a) Notwithstanding any provision of State law, any

11 person convicted of a violation of this chapter shall forfeit

12 to the United States—

13 ‘‘(1) any property constituting, or derived from,

14 any proceeds the person obtained, directly or indi15 rectly, as a result of such violation; and

16 ‘‘(2) any of the person’s property used, or in17 tended to be used, in any manner or part, to com18 mit, or to facilitate the commission of a violation of

19 this chapter.

20 ‘‘(b) The court, in imposing sentence on a defendant

21 for the conviction of a violation of this chapter, shall order

22 that the defendant forfeit to the United States all property

23 described in subsection (a).

24 ‘‘(c) Except as provided in subsection (d), the provi25 sions of subsections (b), (c), and (e) through (p) of section
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1 413 of the Comprehensive Drug Abuse Prevention and

2 Control Act of 1970 (21 U.S.C. 853 (b), (c), and (e)–(p))

3 shall apply to—

4 ‘‘(1) property subject to forfeiture under this

5 section;

6 ‘‘(2) any seizure or disposition of such property;

7 and

8 ‘‘(3) any administrative or judicial proceeding

9 in relation to such property, if consistent with this

10 section.

11 ‘‘(d) Notwithstanding section 524(c) of title 28, there

12 shall be deposited in the Crime Victims Fund established

13 under section 1402 of the Victims of Crime Act of 1984

14 (42 U.S.C. 10601) all amounts from the forfeiture of

15 property under this section remaining after the payment

16 of expenses and sale authorized by law.

17 ‘‘§ 574. Extraterritoriality

18 ‘‘(a) This chapter applies to conduct occurring within

19 the territorial and special maritime jurisdiction of the

20 United States, its territories, and possessions.

21 ‘‘(b) This chapter applies to conduct occurring out22 side the territorial and special maritime jurisdiction of the

23 United States, its territories, and possessions if—

24 ‘‘(1) the offender is a United States citizen; or
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1 ‘‘(2) the victim of the offense is an ‘owner,’ as

2 defined in section 570, and the offense was intended

3 to have, or had, an effect in the United States.

4 ‘‘§ 575. Construction with other laws

5 ‘‘This chapter shall not be construed to preempt or

6 displace any other Federal or State remedies, whether civil

7 or criminal, for the misappropriation of proprietary eco8 nomic information.

9 ‘‘§ 576. Preservation of confidentiality

10 ‘‘In any prosecution under this chapter, the court

11 shall preserve the confidentiality of alleged proprietary

12 economic information by any reasonable and lawful means

13 including, but not limited to—

14 ‘‘(1) the granting of protective orders in con15 nection with discovery proceedings; and

16 ‘‘(2) the holding of in camera hearings, sealing

17 relevant portions of the record, and the ordering of

18 any person involved in the proceedings not to dis19 close the alleged proprietary economic information

20 without prior court approval. Any owner of the pro21 prietary economic information which is the subject

22 of the offense may request the prosecution to seek

23 such protective action.
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1 ‘‘§ 577. Nonapplicability to lawfully authorized law

2 enforcement or intelligence activities

3 ‘‘Any act in which information is seized, taken, trans4 ported, transmitted, or transferred pursuant to or in fur5 therance of any lawfully authorized investigative, protec6 tive, or intelligence activity of a law enforcement agency

7 of the United States, a State, or a political subdivision

8 of a State, or an intelligence agency of the United States,

9 shall not be considered a violation of section 571(a) or

10 572.’’.

11 (b) TABLE OF CHAPTERS.—The table of chapters for

12 part I of title 18, United States Code, is amended by in13 serting after the item for chapter 27 the following:

‘‘28. Economic Espionage ................................................................ 570’’.

14 SEC. 4. RELATED AMENDMENTS.

15 (a) STOLEN PROPERTY.—Section 2311 of title 18,

16 United States Code, is amended by inserting between the

17 items for ‘‘Cattle’’ and ‘‘livestock’’ the following:

18 ‘‘ ‘Goods, wares, or merchandise’ means all forms and

19 types of personal property and chattels—

20 ‘‘(1) including all forms and types of financial,

21 business, scientific, technical, economic, or engineer22 ing information including data, plans, tools, mecha23 nisms, compounds, formulas, designs, prototypes,

24 processes, procedures, programs, codes, or commer25 cial strategies, whether tangible or intangible, and
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1 whether stored, compiled, or memorialized phys2 ically, electronically, graphically, photographically, or

3 in writing if—

4 ‘‘(A) the owner thereof has taken reason5 able measures to keep such property confiden6 tial, and

7 ‘‘(B) the property is not available generally

8 to, or accessible by, the public; and

9 ‘‘(2) not including any property or chattel

10 seized, taken, transported, transmitted, or trans11 ferred pursuant to or in furtherance of any lawfully

12 authorized investigative, protective, or intelligence

13 activity of a law enforcement agency of the United

14 States, a State, or a political subdivision of a State,

15 or of an intelligence agency of the United States.’’.

16 (b) RACKETEER INFLUENCED AND CORRUPT ORGA17 NIZATIONS.—Section 1961(1)(B) of title 18, United

18 States Code, is amended by inserting between ‘‘sections

19 471, 472, and 473 (relating to counterfeiting),’’ and ‘‘sec20 tion 659 (relating to theft from interstate shipment)’’ the

21 following: ‘‘sections 571 and 572 (relating to economic es22 pionage and protection of proprietary economic informa23 tion in interstate and foreign commerce),’’.

24 (c) WIRE AND ELECTRONIC COMMUNICATIONS

25 INTERCEPTION AND INTERCEPTION OF ORAL COMMU-
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1 NICATIONS.—Section 2516(1)(a) of title 18, United States

2 Code, is amended by inserting the following between ‘‘or

3 under the following chapters of this title:’’ and ‘‘chapter

4 37 (relating to espionage)’’ the following: ‘‘chapter 28 (re5 lating to economic espionage and protection of proprietary

6 economic information in interstate and foreign com7 merce),’’.

Æ