II

104TH CONGRESS

2D SESSION S. 1557

To prohibit economic espionage, to provide for the protection of United

States vital proprietary economic information, and for other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 1, 1996

Mr. SPECTER (for himself and Mr. KOHL) introduced the following bill; which

was read twice and referred to the Select Committee on Intelligence

A BILL

To prohibit economic espionage, to provide for the protection

of United States vital proprietary economic information,

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 Security Act

5 of 1996’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress finds that—

8 (1) economic security is an integral part of na9 tional security;
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1 (2) the development of new ideas and technical

2 innovation is critical to sustaining a healthy and

3 competitive national economy;

4 (3) encouraging innovation and creativity re5 quires adequate protection of vital economic propri6 etary information, both tangible and intangible;

7 (4) over 50 countries have covertly tried to ob8 tain advanced technologies from United States in9 dustries;

10 (5) the theft, wrongful destruction or alteration,

11 misappropriation, or wrongful conversion by foreign

12 governments or their agents of vital economic pro13 prietary information belonging to United States

14 owners directly and substantially threatens the

15 health and competitiveness of critical segments of

16 the United States economy and, consequently, the

17 Nation’s security; and

18 (6) current laws are inadequate to protect

19 against economic espionage by foreign governments

20 or those acting on their behalf.

21 (b) PURPOSE.—The purpose of this Act is to protect

22 the national security by preventing economic espionage

23 and furthering the development and lawful utilization of

24 United States vital proprietary economic information by

25 protecting it from theft, wrongful destruction or alter-
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1 ation, misappropriation, and conversion by foreign govern2 ments and their agents or instrumentalities. This Act is

3 intended to protect the vital proprietary economic informa4 tion of the United States Government and United States

5 firms, businesses, industries, and individuals both domes6 tically and abroad by punishing individuals, corporations,

7 and institutions that engage in economic espionage with

8 the intent or purpose of aiding foreign nations or govern9 ments and their instrumentalities and agents.

10 SEC. 3. PREVENTION OF ECONOMIC ESPIONAGE AND PRO11 TECTION OF VITAL PROPRIETARY ECONOMIC

12 INFORMATION.

13 (a) IN GENERAL.—The National Security Act of

14 1947 (50 U.S.C. 421 et seq.) is amended by adding at

15 the end the following new title:

16 ‘‘TITLE IX—ECONOMIC ESPIO17 NAGE AND PROTECTION OF

18 VITAL PROPRIETARY ECO19 NOMIC INFORMATION

20 ‘‘SEC. 901. DEFINITIONS.

21 ‘‘As used in this title:

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

23 or instrumentality’ means any corporation, agency,

24 component, institution, association, instrumentality,

25 or legal, commercial, or business entity that is sub-
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1 stantially owned, controlled, sponsored, commanded,

2 managed, or dominated by a foreign government or

3 subdivision of a foreign government.

4 ‘‘(2) The term ‘foreign agent’ means any offi5 cer, employee, proxy, servant, delegate, or represent6 ative of a foreign nation or government.

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

8 corporation, agency, association, institution, or any

9 other legal, commercial, or business entity.

10 ‘‘(4) The term ‘vital proprietary economic infor11 mation’ means all forms and types of financial, busi12 ness, scientific, technical, economic, or engineering

13 information, including data, plans, tools, mecha14 nisms, compounds, formulas, designs, prototypes,

15 processes, procedures, programs, codes, or commer16 cial strategies, whether tangible or intangible, and

17 however stored, compiled, or memorialized, if—

18 ‘‘(A) the owner has taken reasonable meas19 ures to keep such information confidential; and

20 ‘‘(B) the information derives independent

21 economic value, actual or potential, from not

22 being generally known to, and not being readily

23 ascertainable, acquired, or developed by legal

24 means by the public.
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1 ‘‘(5) The term ‘owner’ means the United States

2 person or persons in whom, or United States Gov3 ernment component, department, or agency in

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

5 or license in, vital proprietary economic information

6 is reposed.

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

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

9 United States citizen or permanent resident

10 alien; and

11 ‘‘(B) in the case of a nonnatural person,

12 an entity substantially owned or controlled by

13 the United States Government or by United

14 States citizens or permanent resident aliens, or

15 incorporated in the United States.

16 ‘‘SEC. 902. ENGAGING IN ECONOMIC ESPIONAGE TO AID

17 FOREIGN NATIONS, GOVERNMENTS, COR18 PORATIONS, INSTITUTIONS, INSTRUMENTAL19 ITIES, OR AGENTS.

20 ‘‘(a) IN GENERAL.—Any person who, with intent to,

21 or reason to believe that it will, injure any owner and bene22 fit any foreign nation, government, corporation, institu23 tion, instrumentality, or agent—

24 ‘‘(1) steals, wrongfully appropriates, takes, car25 ries away, or conceals, or by fraud, artifice, or de-
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1 ception obtains vital proprietary economic informa2 tion;

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

4 draws, photographs, downloads, uploads, alters, de5 stroys, photocopies, replicates, transmits, delivers,

6 sends, mails, communicates, or conveys vital propri7 etary economic information;

8 ‘‘(3) receives, buys, or possesses vital propri9 etary economic information, knowing the vital pro10 prietary economic information to have been obtained

11 by any of the means described in paragraph (1) or

12 (2);

13 ‘‘(4) attempts to commit any offense described

14 in paragraphs (1) through (3);

15 ‘‘(5) wrongfully solicits another to commit any

16 offense described in paragraphs (1) through (3); or

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

18 to commit any offense described in paragraphs (1)

19 through (3), and one or more of such persons do any

20 act to effect the object of the conspiracy,

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

22 more than $500,000 or imprisoned not more than 25

23 years, or both.
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1 ‘‘(b) CORPORATIONS.—Any corporation that commits

2 any offense described in subsection (a) shall be fined not

3 more than $10,000,000.

4 ‘‘SEC. 903. CRIMINAL FORFEITURE.

5 ‘‘(a) IN GENERAL.—Notwithstanding any provision

6 of State law, any person convicted of a violation under

7 this title shall forfeit to the United States—

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

9 any proceeds the person obtained, directly or indi10 rectly, as the result of such violation; and

11 ‘‘(2) any of the person’s property used, or in12 tended to be used, in any manner or part to commit

13 or facilitate the commission of such violation.

14 ‘‘(b) COURT ORDER.—The court, in imposing a sen15 tence on such person, shall order, in addition to any other

16 sentence imposed pursuant to this title, that the person

17 forfeit to the United States all property described in this

18 section.

19 ‘‘(c) APPLICABLE LAW.—Property subject to forfeit20 ure under this section, any seizure and disposition thereof,

21 and any administrative or judicial proceeding in relation

22 thereto, shall be governed by section 413 of the Com23 prehensive Drug Abuse Prevention and Control Act of

24 1970 (21 U.S.C. 853), except for subsection 413(d) which

25 shall not apply to forfeitures under this section.
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1 ‘‘(d) CRIME VICTIMS FUND.—Notwithstanding sec2 tion 524(c) of title 28, United States Code, there shall

3 be deposited in the Crime Victims Fund established under

4 section 1402 of the Victims of Crime Act of 1984 (42

5 U.S.C. 10601) all amounts from the forfeiture of property

6 under this section remaining after the payment of the ex7 penses for forfeiture and sale authorized by law.

8 ‘‘SEC. 904. IMPORT AND EXPORT SANCTIONS.

9 ‘‘(a) IN GENERAL.—The President may prohibit, for

10 a period of up to 5 years, the importation into, or expor11 tation from, the United States of any product produced,

12 made, assembled, or manufactured by a person convicted

13 of any offense described in section 902.

14 ‘‘(b) CIVIL PENALTIES.—The Attorney General may

15 impose a civil penalty not to exceed 5 times the value of

16 the exports or imports involved or $100,000, whichever is

17 greater, against any person who knowingly violates any

18 order of the President issued under the authority of this

19 title. Such penalty may be imposed only after notice and

20 opportunity for a hearing on the record in accordance with

21 sections 554 through 557 of title 5.

22 ‘‘SEC. 905. EXTRATERRITORIALITY.

23 ‘‘(a) CONDUCT OCCURRING IN THE UNITED

24 STATES.—This title applies to conduct occurring within
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1 the territorial and special maritime jurisdiction of the

2 United States.

3 ‘‘(b) CONDUCT OCCURRING OUTSIDE THE UNITED

4 STATES.—This title applies to conduct occurring outside

5 the United States if—

6 ‘‘(1) the offender is a United States person; or

7 ‘‘(2) the victim of the offense is an owner, as

8 defined in section 901, and the offense was intended

9 to have or had a substantial or direct effect on the

10 United States.

11 ‘‘SEC. 906. CONSTRUCTION WITH OTHER LAWS.

12 ‘‘This title shall not be construed to preempt or dis13 place any other Federal or State remedies, whether civil

14 or criminal, for the misappropriation of vital proprietary

15 economic information, or to affect the otherwise lawful dis16 closure of information by any government employee under

17 section 552 of title 5 (commonly known as the Freedom

18 of Information Act).

19 ‘‘SEC. 907. PRESERVATION OF CONFIDENTIALITY.

20 ‘‘In any prosecution under this title, the court may

21 enter such orders and take such other action as may be

22 necessary and appropriate to preserve the confidentiality

23 of vital proprietary economic information, consistent with

24 rule 16 of the Federal Rules of Criminal Procedure, the

25 Federal Rules of Evidence, and other applicable laws. An
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1 interlocutory appeal by the United States shall lie from

2 a decision or order of a district court authorizing the dis3 closure of vital proprietary economic information.

4 ‘‘SEC. 908. LAW ENFORCEMENT AND INTELLIGENCE ACTIVI5 TIES.

6 ‘‘This title does not prohibit any lawfully authorized

7 investigative, protective, or intelligence activity of a law

8 enforcement agency of the United States, a State, or a

9 political subdivision of a State, or an intelligence agency

10 of the United States.’’.

11 (b) TECHNICAL AMENDMENT.—The table of contents

12 of the National Security Act of 1947 is amended by add13 ing at the end the following:

‘‘TITLE IX—ECONOMIC ESPIONAGE AND PROTECTION OF VITAL

PROPRIETARY ECONOMIC INFORMATION

‘‘Sec. 901. Definitions.

‘‘Sec. 902. Engaging in economic espionage to aid foreign nations, governments, corporations, institutions, instrumentalities, or agents.

‘‘Sec. 903. Criminal forfeiture.

‘‘Sec. 904. Import and export sanctions.

‘‘Sec. 905. Extraterritoriality.

‘‘Sec. 906. Construction with other laws.

‘‘Sec. 907. Preservation of confidentiality.

‘‘Sec. 908. Law enforcement and intelligence activities.’’.

14 SEC. 4. WIRE AND ELECTRONIC COMMUNICATIONS INTER15 CEPTION AND INTERCEPTION OF ORAL COM16 MUNICATIONS.

17 Section 2516(1)(a) of title 18, United States Code,

18 is amended by inserting ‘‘title IX of the National Security

19 Act of 1947 (relating to economic espionage and protec-
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1 tion of vital proprietary economic information in interstate

2 and foreign commerce),’’ after ‘‘fuel),’’.

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