In an effort to stem the tide of intellectual property theft from U.S. companies, on January 14, 2013, President Obama signed H.R. 6029, the Foreign and Economic Espionage Penalty Enhancement Act of 2012.
The Act increases the penalties for trade secret theft under the Economic Espionage Act of 1996 for crimes that the perpetrator knows or intends to benefit a foreign government, instrumentality or agent. The Economic Espionage Act had prescribed fines of not more than $500,000 for individuals and not more than $10 million for organizations (18 U.S.C. § 1831). The new Act increases those fines to not more than $5 million for individuals and “not more than the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided” for organizations. Section 3 of the new Act also directs the United States Sentencing Commission to review and “if appropriate” increase the penalties provided by the Federal Sentencing Guidelines for economic espionage or trade secret theft “relating to the transmission or attempted transmission of a stolen trade secret outside of the United States” to “reflect the seriousness of these offenses, account for the potential and actual harm caused by these offenses, and provide adequate deterrence against such offenses.”
A House Report on the bill explains that “[b]y strengthening penalties and enhancing criminal deterrence, the bill protects U.S. jobs and technologies while promoting investments and innovation.” The report cites an October 2011 report by the National Counterintelligence Executive, statements by Director of National Intelligence James R. Clapper, and data from the FBI to emphasize the state-sponsored nature of many instances of trade secret theft and the magnitude of information stolen from U.S. companies. The legislation builds on proposals from the Obama Administration’s March 2011 White Paper on Intellectual Property Enforcement Legislative Recommendations. Although partisan discord has surrounded other legislative efforts to address cybersecurity, the Foreign and Economic Espionage Penalty Enhancement Act passed the Senate by unanimous consent and passed the House by a voice vote.