II

104TH CONGRESS

2D SESSION S. 1556

To prohibit economic espionage, 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

FEBRUARY 1, 1996

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

was read twice and referred to the Committee on the Judiciary

A BILL

To prohibit economic espionage, 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 ‘‘Industrial Espionage

5 Act of 1996’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress finds that—

8 (1) sustaining a healthy and competitive na9 tional economy is imperative;
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1 (2) the development and production of propri2 etary economic information involves every aspect of

3 interstate commerce and business;

4 (3) the development, production, protection,

5 and lawful exchange, sale, and transfer of propri6 etary economic information is essential to maintain7 ing the health and competitiveness of interstate com8 merce and the national economy;

9 (4) much proprietary economic information

10 moves in interstate and foreign commerce and pro11 prietary economic information that does not move in

12 interstate or foreign commerce directly and substan13 tially affects proprietary economic information that

14 does;

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

16 misappropriation, and wrongful conversion of propri17 etary economic information substantially affects and

18 harms interstate commerce, costing United States

19 firms, businesses, industries, and consumers millions

20 of dollars each year; and

21 (6) enforcement of existing State laws protect22 ing proprietary economic information is frustrated

23 by the ease with which stolen or wrongfully appro24 priated proprietary economic information is trans25 ferred across State and national boundaries.
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1 (b) PURPOSE.—The purpose of this Act is to promote

2 the development and lawful utilization of United States

3 proprietary economic information produced for, or placed

4 in, interstate and foreign commerce by protecting it from

5 theft, wrongful destruction or alteration, misappropria6 tion, and conversion.

7 SEC. 3. PREVENTION OF ECONOMIC ESPIONAGE AND PRO8 TECTION OF PROPRIETARY ECONOMIC IN9 FORMATION IN INTERSTATE AND FOREIGN

10 COMMERCE.

11 (a) IN GENERAL.—Title 18, United States Code, is

12 amended by inserting after chapter 89 the following new

13 chapter:

14 ‘‘CHAPTER 90—PROTECTION OF

15 PROPRIETARY ECONOMIC INFORMATION

‘‘Sec.

‘‘1831. Definitions.

‘‘1832. Criminal activities affecting proprietary economic information.

‘‘1833. Criminal forfeiture.

‘‘1834. Import and export sanctions.

‘‘1835. Extraterritoriality.

‘‘1836. Construction with other laws.

‘‘1837. Preservation of confidentiality.

‘‘1838. Law enforcement and intelligence activities.

16 ‘‘§ 1831. Definitions

17 ‘‘As used in this chapter:

18 ‘‘(1) The term ‘person’ means a natural person,

19 corporation, agency, association, institution, or any

20 other legal, commercial, or business entity.
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1 ‘‘(2) The term ‘proprietary economic informa2 tion’ means all forms and types of financial, busi3 ness, scientific, technical, economic, or engineering

4 information, including, but not limited to, data,

5 plans, tools, mechanisms, compounds, formulas, de6 signs, prototypes, processes, procedures, programs,

7 codes, or commercial strategies, whether tangible or

8 intangible, and however stored, compiled, or memori9 alized, if—

10 ‘‘(A) the owner has taken reasonable meas11 ures to keep such information confidential; and

12 ‘‘(B) the information derives independent

13 economic value, actual or potential, from not

14 being generally known to, and not being readily

15 ascertainable, acquired, or developed by legal

16 means by the public.

17 ‘‘(3) The term ‘owner’ means the United States

18 person or persons in whom, or United States Gov19 ernment component, department, or agency in

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

21 or license in, proprietary economic information is re22 posed.

23 ‘‘(4) The term ‘United States person’ means—
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1 ‘‘(A) in the case of a natural person, a

2 United States citizen or permanent resident

3 alien; and

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

5 an entity substantially owned or controlled by

6 the United States Government or by United

7 States citizens or permanent resident aliens, or

8 incorporated in the United States.

9 ‘‘§ 1832. Criminal activities affecting proprietary eco10 nomic information

11 ‘‘(a) Any person, with intent to, or reason to believe

12 that it will, injure any owner of proprietary economic in13 formation having a value of not less than $100,000 that

14 is produced for, or placed in, interstate commerce, and

15 with intent to convert it to his or her own direct use or

16 benefit or the direct use or benefit of another, knowingly—

17 ‘‘(1) steals, wrongfully appropriates, takes, car18 ries away, or conceals, or by fraud, artifice, or de19 ception obtains such information;

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

21 draws, photographs, downloads, uploads, alters, de22 stroys, photocopies, or replicates such information;

23 ‘‘(3) receives, buys, or possesses such informa24 tion, knowing the same to have been stolen or

25 wrongfully appropriated, obtained, or converted;
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1 ‘‘(4) attempts to commit any offense described

2 in paragraphs (1) through (3);

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

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

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

6 to commit any offense described in paragraphs (1)

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

8 act to effect the object of the conspiracy,

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

10 more than $250,000 or imprisoned not more than 15

11 years, or both.

12 ‘‘(b) Any corporation that commits any offense de13 scribed in paragraphs (1) through (6) of subsection (a)

14 shall be fined not more than $10,000,000.

15 ‘‘§ 1833. Criminal forfeiture

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

17 person convicted of a violation under this chapter shall for18 feit to the United States—

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

20 any proceeds the person obtained, directly or indi21 rectly, as the result of such violation; and

22 ‘‘(2) any of the person’s property used, or in23 tended to be used, in any manner or part to commit

24 or facilitate the commission of such violation.
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1 ‘‘(b) The court, in imposing a sentence on such per2 son, shall order, in addition to any other sentence imposed

3 pursuant to this chapter, that the person forfeit to the

4 United States all property described in this section.

5 ‘‘(c) Property subject to forfeiture under this section,

6 any seizure and disposition thereof, and any administra7 tive or judicial proceeding in relation thereto, shall be gov8 erned by section 413 of the Comprehensive Drug Abuse

9 Prevention and Control Act of 1970 (21 U.S.C. 853), ex10 cept for subsection 413(d) which shall not apply to forfeit11 ures under this section.

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

13 shall be deposited in the Crime Victims Fund established

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

15 (42 U.S.C. 10601) all amounts from the forfeiture of

16 property under this section remaining after the payment

17 of expenses and sale authorized by law.

18 ‘‘§ 1834. Import and export sanctions

19 ‘‘(a) The President may prohibit for a period of up

20 to 3 years, the importation into, or exportation from, the

21 United States of any product produced, made, assembled,

22 or manufactured by a person convicted of any offense de23 scribed in section 1832.

24 ‘‘(b) The Attorney General may impose a civil penalty

25 not to exceed 5 times the value of the exports or imports
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1 involved or $100,000, whichever is greater, against any

2 person who knowingly violates any order of the President

3 issued under the authority of this section. Such penalty

4 may be imposed only after notice and opportunity for a

5 hearing on the record in accordance with sections 554

6 through 557 of title 5.

7 ‘‘§ 1835. Extraterritoriality

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

9 the United States.

10 ‘‘(b) This chapter applies to conduct occurring out11 side the territorial and special maritime jurisdiction of the

12 United States, its territories, and possessions if—

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

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

15 defined in section 1831), and the offense was in16 tended to have, or had, an effect in the United

17 States.

18 ‘‘§ 1836. Construction with other laws

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

20 displace any other Federal or State remedies, whether civil

21 or criminal, for the misappropriation of proprietary eco22 nomic information, or to affect the otherwise lawful disclo23 sure of information by any government employee under

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

25 of Information Act).
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1 ‘‘§ 1837. Preservation of confidentiality

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

3 may enter such orders and take such other action as may

4 be necessary and appropriate to preserve the confidential5 ity of proprietary economic information, consistent with

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

7 Federal Rules of Evidence, and other applicable laws. An

8 interlocutory appeal by the United States shall lie from

9 a decision or order of a district court authorizing the dis10 closure of proprietary economic information.

11 ‘‘§ 1838. Law enforcement and intelligence activities

12 ‘‘This chapter does not prohibit any lawfully author13 ized investigative, protective, or intelligence activity of a

14 law enforcement agency of the United States, a State, or

15 a political subdivision of a State, or an intelligence agency

16 of the United States.’’.

17 (b) TECHNICAL AMENDMENT.—The table of chapters

18 for title 18, United States Code, is amended by inserting

19 after the item relating to chapter 89 the following new

20 item:

‘‘90. Protection of Proprietary Economic Information ....... 1831’’.

21 SEC. 4. WIRE AND ELECTRONIC COMMUNICATIONS INTER22 CEPTION AND INTERCEPTION OF ORAL COM23 MUNICATIONS.

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

25 is amended by inserting ‘‘chapter 90 (relating to economic
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1 espionage and protection of proprietary economic informa2 tion in interstate and foreign commerce),’’ after ‘‘title:’’.

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