B. THE ECONOMIC ESPIONAGE ACT OF 1996
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It is broader than the
definition of "trade secret" in the Uniform Trade Secrets Act
(103) in a number of respects, but prior
case law should be instructive in illuminating the EEA's definition of a trade secret.
142 Cong. Rec. S12201, S12212 (daily ed. Oct. 2, 1996).
Thus, § 1831 does not apply where a foreign corporation misappropriates the trade secret and
there is no evidence of sponsorship or "coordinated intelligence activity" by a foreign
government. Id. at S12213. In such an instance, however, the foreign corporation could still be
properly charged under § 1832.
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Thus, it is a defense if the defendant demonstrates that he independently developed the trade
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Id. at 560-61.
466-67 (Wis. 1983) (citing State ex rel. Ampco Metal, Inc. v. O'Neil, 78 N.W. 2d 921 (Wis.
1956) (both discussing inherent power of a court to limit the public nature of trials).
C. OTHER POSSIBLE CHARGES
See U.S.A.M. 9-61.260 - 9.61.261(A-D).
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365 F.2d at 394.
Id. at 421.
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96. 18 U.S.C.§ 1905 provides, inter alia, for misdemeanor sanctions for the unauthorized disclosure of government information, including trade secrets, by a government employee.
97. As noted by Senator Arlen Specter, a co-sponsor of the Economic Espionage Act:
142 Cong. Rec. S12201, 12209 (daily ed. Oct. 2, 1996) (statements of Sen. Specter).
98. For additional discussion of the Economic Espionage Act of 1996 see James H.A. Pooley, Mark A. Lemley, and Peter J. Toren, Understanding the Economic Espionage Act of 1996, 5 Tex. Int. Prop. L.J. 177 (Winter 1997).
99. Section 1831 provides:
100. Section 1832 provides:
guilty of a felony.
(a) Whoever, with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will injure any owner of that trade secret, knowingly- (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; (4) attempts to commit any offense described in paragraphs (1) through (3); or (5) conspires with one or more other persons to commit any offense described in paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy, is
101. Prior to the passage of the EEA, the Attorney General assured Congress in writing that the Department of Justice will require that all prosecutions brought under the EEA be approved by the Attorney General, the Deputy Attorney General, or the Assistant Attorney General of the Criminal Division. See "Department of Justice Oversight," infra p. 85.
102. 18 U.S.C. § 1839 defines a "trade secret" as:
103. Section 1(4) of the Uniform Trade Secrets Act provides:
(4) "Trade secret" means information, including a formula pattern, compilation, program, device, method technique, or process that
(I) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
104. For example, a defendant can be convicted for stealing a bike even if the victim failed to protect it by leaving it unlocked on his front porch.
105. The term "foreign instrumentality" means:
18 U.S.C. § 1839(1).
106. The term "foreign agent" means:
18 U.S.C. § 1839(2).
107. Clear evidence of theft or copying is helpful in all cases to overcome the potential problem of prosecuting the defendant's "mental recollections" and a defense that "great minds think alike."
108. This section also provides for interlocutory appeals from a decision or a court order authorizing the disclosure of any trade secret. Id.
109. The letter states in full:
|October 1, 1996|
Dear Chairman Hatch:
Thank you for your support of the Economic Espionage Act of 1996 ("Act"). The need for this law cannot be understated as it will close significant gaps in federal law, thereby protecting proprietary economic information and the health and competitiveness of the American economy.
The Department shares your concerns that the legislation be implemented in accordance with the intent of Congress and therefore will require, for a period of five years after implementation of the Act, that the United States may not file a charge under Chapter 90, or use a violation of Chapter 90 as a predicate offense under any other law, without the personal approval of the Attorney General, the Deputy Attorney General, or the Assistant Attorney General for the Criminal Division (or the Acting official in each of these positions if a position is filled by an acting official). This requirement will be implemented by published regulation.
Violations of such regulations will be appropriately sanctionable. Any such violations will be reported by the Attorney General to the Senate and House Judiciary Committees.
Once again, thank you for your leadership in this critical area.
110. 18 U.S.C. § 1905.
111. Charging both a violation of the Economic Espionage Act and another statute such as Interstate Transportation of Stolen Property or Wire Fraud arising from the same act or acts does not violate the Double Jeopardy Clause of the Fifth Amendment of the Constitution because "each offense contains an element not contained in the other." United States v. Dixon, 509 U.S. 688, 690 (1993) (citing Blockburger v. United States, 284 U.S. 299, 304 (1932).
112. In Dowling, the defendant was convicted of violating § 2314 following his interstate distribution of bootleg
Elvis Presley records. The Supreme Court reversed the conviction, holding that Congress did not intend that § 2314
function as a criminalization of copyright infringement. 473 U.S. at 216-18. The Court noted that its decision did
not address a situation in which the initial procurement was accomplished by theft or fraud, and acknowledged
that the courts have never required that the items stolen and transported remain in entirely unaltered form. The
Court emphasized, however, that:
473 U.S. at 216.
113. The Brown court did distinguish a situation in which the defendant illegally appropriates a tangible item containing an intangible component, such as a chemical formula written on a stolen piece of paper. The
court suggested that such an appropriation would violate § 2314, even where the value of the paper itself is insignificant and the overall value is almost wholly derived from the intangible component. 925 F.2d at 1307-08, n.14, citing United States v. Stegora, 849 F.2d 291, 292 (8th Cir. 1988).
114. At trial the government dismissed the § 2314 count against one of the defendants because it learned that another telephone company was publicly disseminating a computerized text file containing information virtually identical to that the defendant was accused of stealing. Since the information was in the public domain, it could not be a trade secret.
115. There are also at least two other decisions that, in general, support the position that transporting intangible property in interstate commerce violates § 2314. However, both these cases involve the interstate transportation of illegal copies of copyrighted works and their continuing viability is suspect in light of the Supreme Court's decision in United States v. Dowling. In United States v. Belmont, 715 F.2d 459 (9th Cir.), cert. denied, 465 U.S. 1022 (1984), the court held that transporting in interstate commerce illegal "off the air" videotape copies of motion pictures protected by copyright violated § 2314. The court specifically rejected defendant's argument that § 2314 distinguishes between the interstate transportation of "stolen copies" and the interstate transportation of Æff the air" copies. See also United States v. Gottesman, 724 F.2d 1517 (2d Cir. 1984). However, as noted, the Dowling Court specifically held that § 2314 does not reach the interstate transportation of unauthorized copies of copyrighted works.
116. For a detailed discussion of 18 U.S.C. §§ 1341 and 1343, readers should refer to Chapter 43 of the U.S. Attorney's Manual and call the Fraud Section of the Criminal Division for further information and guidance.
117. Section 1341 provides in pertinent part as follows:
118. See, e.g., Abbott v. United States, 239 F.2d 310 (5th Cir. 1956).
119. See, e.g., Carpenter v. United States, 484 U.S. 19 (1987). The defendant in Carpenter wrote the "Heard on
the Street" column for The Wall Street Journal. Although these columns contained no insider information, they had
the potential to affect the stock prices of companies discussed in the column because of the "quality and integrity" of
the information. The defendant was charged with passing advance information on the columns to two co-conspirators who executed pre-publication trades and earned profits of $690,000.
120. The Mail and Wire Fraud statutes have been identically construed with respect to the issues discussed here. United States v. Von Barta, 635 F.2d 999, 1005 n.11 (2d Cir.), cert. denied, 450 U.S. 998 (1981) (citing United States v. Louderman, 576 F.2d 1383, 1287 n.3 (9th Cir.), cert. denied, 439 U.S. 896 (1978)).
121. In McNally v. United States, 483 U.S. 350 (1987), the Supreme Court held that the mail fraud statute did
not include schemes to defraud citizens of their intangible right to honest government, but was limited to protecting
"property" rights. In response to this decision, Congress passed 18 U.S.C. § 1346, which provides:
122. The Computer Fraud and Abuse Act was amended effective October 11, 1996.