I

104TH CONGRESS

2D SESSION H. R. 3723

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

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,

3 SECTION 1. SHORT TITLE.

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

5 Act of 1996’’.

6 SEC. 2. PROTECTION OF PROPRIETARY ECONOMIC INFOR7 MATION.

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

9 States Code, is amended by adding at the end the follow10 ing:
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1 ‘‘§ 669. Protection of proprietary economic informa2 tion

3 ‘‘(a) OFFENSE.—Whoever—

4 ‘‘(1) with the intent to, or with reason to be5 lieve that the offense will, benefit any foreign gov6 ernment, foreign instrumentality, or foreign agent;

7 or

8 ‘‘(2) with the intent to divert that information

9 to the use or benefit of anyone other than the owner

10 thereof, and with the intent to, or with reason to be11 lieve that the offense will, disadvantage any owner of

12 proprietary economic information that is related to

13 or is included in a product that is produced for or

14 placed in interstate or foreign commerce;

15 wrongfully copies or otherwise controls any economic pro16 prietary information, or attempts or conspires to do so

17 shall be punished as provided in subsection (b).

18 ‘‘(b) PUNISHMENT.—

19 ‘‘(1) GENERALLY.—The punishment for an of20 fense under this section is—

21 ‘‘(A) in the case of an offense under sub22 section (a)(1), a fine under this title or impris23 onment for not more than 25 years, or both;

24 and
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1 ‘‘(B) in the case of an offense under sub2 section (a)(2), a fine under this title or impris3 onment for not more than 15 years.

4 ‘‘(2) INCREASED MAXIMUM FINE FOR ORGANI5 ZATIONS.—If an organization commits an offense—

6 ‘‘(A) under subsection (a)(1), the maxi7 mum fine, if not otherwise larger, that may be

8 imposed is $10,000,000; and

9 ‘‘(B) under subsection (a)(2), the maxi10 mum fine, if not otherwise larger, that may be

11 imposed is $5,000,000.

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

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

14 any agency, bureau, ministry, component, institu15 tion, association, or any legal, commercial, or busi16 ness organization, corporation, firm, or entity that is

17 substantially owned, controlled, sponsored, com18 manded, managed, or dominated by a foreign gov19 ernment or subdivision thereof;

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

21 employee, proxy, servant, delegate, or representative

22 of a foreign nation or government;

23 ‘‘(3) the term ‘proprietary economic informa24 tion’ means all forms and types of financial, busi25 ness, scientific, technical, economic, or engineering
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1 information including data, plans, tools, mecha2 nisms, compounds, formulas, designs, prototypes,

3 processes, procedures, programs, codes, or commer4 cial strategies, whether tangible or intangible, and

5 whether stored, compiled, or memorialized phys6 ically, electronically, graphically, photographically, or

7 in writing if—

8 ‘‘(A) the owner thereof has taken reason9 able measures to keep such information con10 fidential; and

11 ‘‘(B) the information derives independent

12 economic value, actual or potential, from not

13 being generally known to, and not being readily

14 ascertainable through proper means by, the

15 public;

16 ‘‘(4) the term ‘owner’ means the person in

17 whom, or United States Government component, de18 partment, or agency in which, rightful legal, bene19 ficial, or equitable title to, or license in, proprietary

20 economic information is reposed; and

21 ‘‘(5) the term ‘United States person’ means—

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

23 United States citizen or permanent resident

24 alien; and
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1 ‘‘(B) in the case of an organization, an en2 tity substantially owned or controlled by United

3 States citizens or permanent resident aliens, or

4 incorporated in the United States.

5 ‘‘(d) CRIMINAL FORFEITURE.—

6 ‘‘(1) Notwithstanding any other provision of

7 State law, any person convicted of a violation under

8 this chapter shall forfeit to the United States—

9 ‘‘(A) any property constituting, or derived

10 from, any proceeds the person obtained, directly

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

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

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

14 commit or facilitate the commission of such vio15 lation, if the court in its discretion so deter16 mines, taking into consideration the nature,

17 scope, and proportionality of the use of the

18 property in the offense.

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

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

21 imposed pursuant to this section, that the person

22 forfeit to the United States all property described in

23 this section.

24 ‘‘(3) Property subject to forfeiture under this

25 section, any seizure and disposition thereof, and any
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1 administrative or judicial proceeding in relation

2 thereto, shall be governed by the provisions of sec3 tion 413 of the Comprehensive Drug Abuse Preven4 tion and Control Act of 1970 (21 U.S.C. 853), ex5 cept for subsection 413(d) which shall not apply to

6 forfeitures under this section.

7 ‘‘(e) TERRITORIAL APPLICATION.—

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

9 within the United States.

10 ‘‘(2) This section also applies to conduct occur11 ring outside the United States if—

12 ‘‘(A) the offender is a United States per13 son; or

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

15 was committed in the United States.

16 ‘‘(f) NONPREEMPTION OF OTHER REMEDIES.—This

17 section shall not be construed to preempt or displace any

18 other remedies, whether civil or criminal, provided by

19 United States Federal, State, commonwealth, possession,

20 or territory law for the misappropriation of proprietary

21 economic information.

22 ‘‘(g) ORDERS TO PRESERVE CONFIDENTIALITY.—In

23 any prosecution or other proceeding under this section, the

24 court shall enter such orders and take such other action

25 as may be necessary and appropriate to preserve the con-
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1 fidentiality of proprietary economic information, consist2 ent with the requirements of the Federal Rules of Crimi3 nal and Civil Procedure, the Federal Rules of Evidence,

4 and all other applicable laws. An interlocutory appeal by

5 the United States shall lie from a decision or order of a

6 district court authorizing or directing the disclosure of

7 proprietary economic information.

8 ‘‘(h) EXCEPTIONS TO PROHIBITION.—

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

10 not impair any otherwise lawful activity conducted

11 by an agency or instrumentality of the United

12 States, a State, or a political subdivision of a State.

13 ‘‘(2) This section does not prohibit the report14 ing of any suspected criminal activity to any law en15 forcement agency or instrumentality of the United

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

17 to any intelligence agency of the United States, or

18 to Congress.’’.

19 SEC. 3. WIRE AND ELECTRONIC COMMUNICATIONS INTER20 CEPTION AND INTERCEPTION OF ORAL COM21 MUNICATIONS.

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

23 is amended by inserting ‘‘section 669 (relating to economic

24 espionage),’’ after ‘‘(bribery in sporting contests),’’.

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