WASHINGTON – Today, U.S. Senator Herb Kohl questioned the U.S. Intellectual Property Enforcement Coordinator Victoria Espinel at a Judiciary oversight hearing regarding enforcement of the Economic Espionage Act.  His questions reflected growing concern about increasing trade secret theft, especially by individuals connected to overseas companies.  In 1996 Congress enacted the Economic Espionage Act, making it a federal crime to steal a trade secret. Economic espionage and trade secret theft continue to pose a substantial threat and the Federal Bureau of Investigation (FBI) estimates that U.S. companies lose billions of dollars each year to criminals who steal their ideas, formulas, designs and other proprietary information.

Today, as much as 80% of companies' assets are intangible trade secrets.  Advances in technology make the protection of trade secrets more difficult and more critical than ever.  Trade secrets can simply be downloaded from a company's computer, uploaded to the Internet, and transferred anywhere in the world in a matter of minutes. 

At the hearing, Kohl said he was pleased with the Justice Department's increased number of investigations into economic espionage cases.  However, he suggested that this trend demonstrates an even greater problem and asked if more resources were needed to protect American businesses and bring criminals to justice. Additionally, he asked about a recent court ruling (United States v. Aleynikov) which overturned the conviction of a former Goldman Sachs employee who stole valuable computer code from the company, worth many millions of dollars.  The court ruled that he did not violate the Economic Espionage Act because the stolen computer code was not a product intended for sale, as required by the statute.   

Espinel echoed Kohl's concern about the recent court ruling and said that the Administration is actively considering how to address it. She agreed to work with Congress if additional legislation is needed. Additionally, she mentioned that economic espionage enforcement is a high priority and the rise in prosecution of these cases shows that the resources are being utilized. She stated that additional resources would be used to increase the number of Department of Justice personnel overseas to monitor and work with foreign law enforcement to identify cases of economic espionage. Espinel also noted a major step forward last week when, at this year's U.S.-China Strategic and Economic Dialogue, China publicly agreed to increase enforcement against trade secret theft.     

Last December, the Senate Judiciary Committee approved U.S. Senator Herb Kohl's bipartisan "Economic Espionage Penalty Enhancement Act of 2011." This legislation would increase maximum penalties for stealing a trade secret to benefit a foreign company. This legislation was also introduced by Senators Chris Coons (D-DE) and Sheldon Whitehouse (D-RI) and is co-sponsored by Senators Richard Blumenthal (D-CT), Tom Coburn (R-OK), Dianne Feinstein (D-CA), Lindsey Graham (R-SC), Amy Klobuchar (D-MN) and Jon Kyl (R-AZ).    

The Economic Espionage Penalty Enhancement Act will increase the maximum sentence for economic espionage from 15 years to 20 years and direct the Sentencing Commission to consider increasing the penalty range for theft of trade secrets and economic espionage. The bill is intended to be a starting point for a larger discussion about the implementation of the Economic Espionage Act and whether additional updates and improvements are needed in light of the global economy and advances in technology.