Economic Espionage Act of 1996

United States law, 18 U.S.C. §§ 1831-39 that criminalizes trade secret theft. The statute has one particularly controversial feature in that it establishes two offenses, under §1831 theft of trade secrets to benefit a foreign, i.e., non-US entity and under §1832 theft of trade secrets in general. Violations of §1831 can attract a fine of $500,000 and/or imprisonment of up to 15 years for an individual while organizations involved may be fined up to $10,000,000. Violations of §1832 attracts lower penalties, $500,000 and/or a prison sentence of up to 10 years, while organizations can be fined up to $5,000,000. Moreover, §1832 imposes a higher standard for conviction in that the defendant must be shown to have:

  1. acted with the intent to convert (i.e., take) the trade secret;
  2. so as to economically benefit someone other than the owner of the trade secret; and
  3. to have done so with the intent or knowledge that the conversion would injure the owner of the trade secret.

Finally, perhaps the strongest sanction of the Act is that it also provides that the facilities used by an entity, to commit or facilitate the violation of the Act, may be seized by the U.S. government. The statute has also been criticized as so vague, that it could easily be employed in license disputes, criminalizing what should be treated as civil matters. Moreover, the statute could have a chilling effect on the ability of employees to change jobs, especially as language in early drafts of the act that made an exception to the information covered by the act of:

“knowledge, experience, training, or skill that a person lawfully acquires during their work as an employee or independent contractor.”

One key requirement of the Act is that a company asserting that its trade secrets have been taken must have taken reasonable steps to protect that information’s secrecy.

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