The Economic Espionage Act: Key Provisions

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The Economic Espionage Act (EEA), codified in 18 U.S.C. § 1831-1839, makes the theft of or trafficking in trade secrets for foreign governments, instrumentalities, or agents a criminal act. Prior to passing the EEA, the Trade Secrets Act was the only federal statute that directly prohibited economic espionage.[1] The Trade Secrets Act forbids the unauthorized disclosure of confidential government information by government employees but does not, however, apply to private-sector employees.[2] Thus, following a mass sale of trade secrets following the Cold War, the EEA was implemented.[3]

Theft Benefitting a Foreign Government: Codified in Section 1831 

The first offense covered by the EEA is addressed by 18 U.S.C. § 1831. Section 1831 addresses “economic espionage” which arises when the theft in question benefits a foreign government, instrumentality, or agent.[4] Economic espionage prosecutions under Section 1831 require express approval from the Attorney General, the Deputy Attorney General, or the Assistant Attorney General of the Criminal Division.[5] If a foreign instrumentality element does not exist or cannot be proved, the government may still establish a violation under 18 U.S.C. § 1832 by proving three additional elements.

Theft of Commercial Trade Secrets: Codified in Section 1832 

18 U.S.C. § 1832, the second codified offense, punishes the commercial theft of trade secrets carried out for economic advantage whether or not it benefits a foreign government, instrumentality, or agent.[6] This offense is more general, applies to both foreign and domestic trade secret disputes, and carries a ten-year maximum term of imprisonment.[7]Section 1832 contains three additional limitations not found in Section 1831.[8] First, a defendant charged under section 1832 must intend to convert a trade secret “to the economic benefit of anyone other than the owner thereof,” which includes the defendant.[9] Second, section 1832 states that the defendant must intend or know that the offense will injure an owner of the trade secret, a restriction not found in Section 1831. Finally, unlike section 1831, section 1832 also requires that the trade secret be “related to or included in a product that is produced for or placed in interstate or foreign commerce.”[10]

Elements of a Trade Secret

For both section 1831 and 1832 claims, a plaintiff must prove that the information in question was a trade secret. In order to do so successfully, a plaintiff must prove that the information was not “generally known to,” or “readily ascertainable through proper means by” the public,[11]  that reasonable measures under the circumstances were taken to keep the information confidential,[12] and that the information holds independent economic value.[13]

[1] 18 U.S.C. § 1905

[2] United States v. Hsu, 155 F.3d 189, 194 (3d Cir. 1998); United States v. Yang, 281 F.3d 534, 543 (6th Cir. 2002) (noting “the purpose of the EEA was to provide a comprehensive tool for law enforcement personnel to use to fight theft of trade secrets”).

[3] Hsu, 155 F.3d at 194 (citing Richard J. Heffernan & Dan T. Swartwood, Trends in Intellectual Property Loss 4, 15 (1996) (Government spies migrated to the private sector following the Cold War and by 1996 it was estimated as much as $24 billion in trade secrets was being stolen and sold each year).

[4] 18 U.S.C. § 1832(a) (as amended by the Theft of Trade Secrets Clarification Act, Pub. L. No. 112-236, § 2, 126 Stat. 1627 (2012)) (‘Theft’ is defined to mean “(1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information; (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys such information; (3) receives, buys, or possesses such information, knowing the same to have been stolen or appropriated, obtained, or converted without authorization.”)

[5] 18 U.S.C. § 1831; USAM 9-2.400, 9-59.000.

[6] 18 U.S.C. § 1832(a).

[7] Id.

[8] Hsu, 155 F.3d at 195.

[9] Id.

[10] Id. at 196

[11]See APPENDIX P2. Economic Espionage Act (18 U.S.C.A. § 1839(3)) (As Amended May 11, 2016 by the Defend Trade Secrets Act of 2016- See Appendix P3, infra), 4 Trade Secrets Law Appendix P2. (Congress passed the Defend Trade Secrets Act (“DTSA”) in 2016 which supplements the EEA by creating a private civil cause of action for trade secret misappropriation.)

[12] United States v. Chung, 659 F.3d 815, 825 (9th Cir. 2011).

[13] 18 U.S.C. § 1839(3)(B); US West Communications, Inc. v. Office of Consumer Advocate, 498 N.W.2d 711, 714 (Iowa 1993) (citations omitted).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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