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PROTECTING TRADE SECRETS:
FBI Cracks Down on Economic Espionage

10/10/03

Economic Espionage graphicSeven years ago today, on October 11, 1996, the Economic Espionage Act was signed into law, for the first time explicitly criminalizing the theft of commercial trade secrets -- and slapping substantial penalties on convicted transgressors.

What kind of trade secrets? All kinds: computer source code, chemical formulas, R&D data, financial info, manufacturing processes, lists of suppliers/customers, even marketing strategies.

It was a landmark piece of legislation at that time, showing the foresight of Congress in protecting proprietary information and trade secrets in today's global market and wired world... and, by extension, the very health and competitiveness of critical segments of the U.S. economy.

What's the casework like? Intensive, absolutely dependent on partnerships with American business, and productive. The FBI and the Justice Department are currently investigating and prosecuting 132 cases of trade secret theft under the act.

One of those cases goes to trial on October 20 -- and it's a fascinating one. In November 2001, two men were arrested as they were attempting to board a flight to the People's Republic of China at San Francisco International Airport... with their suitcases jampacked with proprietary documents from Silicon Valley companies.

The two men -- originally from China -- allegedly conspired to download proprietary and trade secret information about computer chip designs from their previous employers with the intent of using it to develop and sell a new microprocessor in China. FBI agents arrested the pair after a U.S. Customs Service search of their luggage found documents from two high-tech companies stamped "proprietary/confidential." More trade secret documents from two
other companies that had employed the men were later seized from their homes and offices.

The charges. Indictments of the two men -- one an American citizen, the other a permanent U.S. resident -- were as follows: ten counts of economic espionage, possession of stolen trade secrets, and foreign transportation of stolen property. If they are found guilty of all charges, they could be sentenced to as many as 115 years in jail and ordered to pay millions of dollars in fines and restitution.

A small price to pay, when you think about it, as the theft of trade secrets is estimated to cost U.S. companies tens of billions of dollars a year.