Union Calendar No. 426

104TH CONGRESS

2D SESSION H. R. 3723

[Report No. 104–788]

A BILL

To amend title 18, United States Code, to protect

purposes.proprietary economic information, and for other

SEPTEMBER 16, 1996

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 426

104TH CONGRESS

2D SESSION H. R. 3723

[Report No. 104–788]

To amend title 18, United States Code, to protect proprietary economic

information, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 26, 1996

Mr. MCCOLLUM (for himself and Mr. SCHUMER) introduced the following bill;

which was referred to the Committee on the Judiciary

SEPTEMBER 16, 1996

Additional sponsor: Mr. HAMILTON

SEPTEMBER 16, 1996

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on June 26, 1996]

A BILL

To amend title 18, United States Code, to protect 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,
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1 SECTION 1. SHORT TITLE.

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

3 Act of 1996’’.

4 SEC. 2. PROTECTION OF TRADE SECRETS.

5 (a) IN GENERAL.—Chapter 31 of title 18, United

6 States Code, is amended by adding at the end the following:

7 ‘‘§ 670. Protection of trade secrets

8 ‘‘(a) OFFENSE.—Whoever—

9 ‘‘(1) with the intent to, or with reason to believe

10 that the offense will, benefit any foreign government,

11 foreign instrumentality, or foreign agent; or

12 ‘‘(2) with the intent to divert a trade secret, that

13 is related to or is included in a product that is pro14 duced for or placed in interstate or foreign commerce,

15 to the economic benefit of anyone other than the

16 owner thereof, and with the intent to, or with reason

17 to believe that the offense will, disadvantage any

18 owner of that trade secret;

19 wrongfully copies or otherwise controls a trade secret, or

20 attempts or conspires to do so shall be punished as provided

21 in subsection (b).

22 ‘‘(b) PUNISHMENT.—

23 ‘‘(1) GENERALLY.—The punishment for an of24 fense under this section is—
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1 ‘‘(A) in the case of an offense under sub2 section (a)(1), a fine under this title or impris3 onment for not more than 25 years, or both; and

4 ‘‘(B) in the case of an offense under sub5 section (a)(2), a fine under this title or impris6 onment for not more than 15 years.

7 ‘‘(2) INCREASED MAXIMUM FINE FOR ORGANIZA8 TIONS.—If an organization commits an offense—

9 ‘‘(A) under subsection (a)(1), the maximum

10 fine, if not otherwise larger, that may be im11 posed is $10,000,000; and

12 ‘‘(B) under subsection (a)(2), the maximum

13 fine, if not otherwise larger, that may be im14 posed is $5,000,000.

15 ‘‘(c) DEFINITIONS.—As used in this section—

16 ‘‘(1) the term ‘foreign instrumentality’ means

17 any agency, bureau, ministry, component, institution,

18 association, or any legal, commercial, or business or19 ganization, corporation, firm, or entity that is sub20 stantially owned, controlled, sponsored, commanded,

21 managed, or dominated by a foreign government;

22 ‘‘(2) the term ‘foreign agent’ means any officer,

23 employee, proxy, servant, delegate, or representative of

24 a foreign government;
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1 ‘‘(3) the term ‘trade secret’ means all forms and

2 types of financial, business, scientific, technical, eco3 nomic, or engineering information, including pat4 terns, plans, compilations, program devices, formulas,

5 designs, prototypes, methods, techniques, processes,

6 procedures, programs, or codes, whether tangible or

7 intangible, and whether or how stored, compiled, or

8 memorialized physically, electronically, graphically,

9 photographically, or in writing if—

10 ‘‘(A) the owner thereof has taken reasonable

11 measures to keep such information secret; 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 through proper means by, the pub16 lic; and

17 ‘‘(4) the term ‘owner’, with respect to a trade se18 cret, means the person or entity in whom or in which

19 rightful legal or equitable title to, or license in, the

20 trade secret is reposed.

21 ‘‘(d) CRIMINAL FORFEITURE.—

22 ‘‘(1) Notwithstanding any other provision of

23 State law, any person convicted of a violation under

24 this section shall forfeit to the United States—
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1 ‘‘(A) any property constituting, or derived

2 from, any proceeds the person obtained, directly

3 or indirectly, as the result of such violation; and

4 ‘‘(B) any of the person’s property used, or

5 intended to be used, in any manner or part, to

6 commit or facilitate the commission of such vio7 lation, if the court in its discretion so deter8 mines, taking into consideration the nature,

9 scope, and proportionality of the use of the prop10 erty in the offense.

11 ‘‘(2) The court, in imposing sentence on such

12 person, shall order, in addition to any other sentence

13 imposed pursuant to this section, that the person for14 feit to the United States all property described in this

15 section.

16 ‘‘(3) Property subject to forfeiture under this sec17 tion, any seizure and disposition thereof, and any ad18 ministrative or judicial proceeding in relation there19 to, shall be governed by the provisions of section 413

20 of the Comprehensive Drug Abuse Prevention and

21 Control Act of 1970 (21 U.S.C. 853), except for sub22 sections (d) and (j) of such section, which shall not

23 apply to forfeitures under this section.

24 ‘‘(e) ORDERS TO PRESERVE CONFIDENTIALITY.—In

25 any prosecution or other proceeding under this section, the
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1 court shall enter such orders and take such other action as

2 may be necessary and appropriate to preserve the confiden3 tiality of trade secrets, consistent with the requirements of

4 the Federal Rules of Criminal and Civil Procedure, the Fed5 eral Rules of Evidence, and all other applicable laws. An

6 interlocutory appeal by the United States shall lie from a

7 decision or order of a district court authorizing or directing

8 the disclosure of any trade secret.

9 ‘‘(f) CIVIL PROCEEDINGS TO ENJOIN VIOLATIONS.—

10 ‘‘(1) GENERALLY.—The Attorney General may,

11 in a civil action, obtain appropriate injunctive relief

12 against any violation of this section.

13 ‘‘(2) EXCLUSIVE JURISDICTION.—The district

14 courts of the United States shall have exclusive origi15 nal jurisdiction of civil actions under this subsection.

16 ‘‘(g) TERRITORIAL APPLICATION.—

17 ‘‘(1) This section applies to conduct occurring

18 within the United States.

19 ‘‘(2) This section also applies to conduct occur20 ring outside the United States if—

21 ‘‘(A) the offender is—

22 ‘‘(i) a United States citizen or perma23 nent resident alien; or

24 ‘‘(ii) an organization substantially

25 owned or controlled by United States citi-
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1 zens or permanent resident aliens, or incor2 porated in the United States; or

3 ‘‘(B) an act in furtherance of the offense

4 was committed in the United States.

5 ‘‘(h) NONPREEMPTION OF OTHER REMEDIES.—This

6 section shall not be construed to preempt or displace any

7 other remedies, whether civil or criminal, provided by Unit8 ed States Federal, State, commonwealth, possession, or ter9 ritory law for the misappropriation of a trade secret.

10 ‘‘(i) EXCEPTIONS TO PROHIBITION.—

11 ‘‘(1) This section does not prohibit and shall not

12 impair any otherwise lawful activity conducted by an

13 agency or instrumentality of the United States, a

14 State, or a political subdivision of a State.

15 ‘‘(2) This section does not prohibit the reporting

16 of any suspected criminal activity to any law enforce17 ment agency or instrumentality of the United States,

18 a State, or a political subdivision of a State, to any

19 intelligence agency of the United States, or to Con20 gress.’’.

21 (b) CLERICAL AMENDMENT.—The table of sections at

22 the beginning of chapter 31, United States Code, is amended

23 by adding at the end the following new item:

‘‘670. Protection of trade secrets.’’.
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1 SEC. 3. WIRE AND ELECTRONIC COMMUNICATIONS INTER2 CEPTION AND INTERCEPTION OF ORAL COM3 MUNICATIONS.

4 Section 2516(1)(c) of title 18, United States Code, is

5 amended by inserting ‘‘section 670 (relating to economic es6 pionage),’’ after ‘‘(bribery in sporting contests),’’.