December 17, 2017

What Your Company Can Learn From My Analysis of the Economic Espionage Act

If you think your company’s trade secrets are safe, think again! In my article, which was published on September 212, 2012, in  BNA’s Patent, Trademark & Copyright Journal, I trace the approximately 124 prosecutions that the government has brought under the Economic Espionage Act (“EEA”), and one of my conclusions is that very few companies are doing enough to protect their intellectual property. In addition, the article includes conclusions about: (1) the locations of the cases: (2) the extent of foreign government involvement; (3) defendant’s gender; (4) defendant’s level of education; (5) relationship of defendant to the victim; (6) nationality of the defendant/purpose of the theft; (7) type of trade secret stolen; (8) identify of the victim; (9) dispositions; and (10) sentences. The study was based on the first compilation of EEA prosecutions under the EEA, which I conducted using a variety of sources including Pacer, Westlaw, the Department of Justice website, and other public sources.

Based on these findings and conclusions, the article also makes conclusions and recommendations for both government and industry. With regard to the government, the findings suggest that it should be more aggressive in prosecuting violations of the EEA if it were truly serious about deterring thefts of trade secrets and that the government has not been as active as claimed. Further, there is a marked difference among United States Attorney’s Offices in the number of cases the office has charged under the EEA.

The effectiveness of the EEA in protecting trade secrets is also hampered by statutory limitations of the current version of the EEA. In particular, Congress should amend the EEA so that it unambiguously covers the theft of trade secrets to the extent permitted by the Commerce Clause, and that it also should protect trade secrets in the development stage. Finally, Congress should increase the penalties for theft of trade secrets not involving a foreign entity; more than 90 percent of the prosecutions, thus far, have not involved a foreign entity, and the defendant was sentenced to probation or home confinement in almost 40 percent of the cases.

With regard to industry, the findings indicate that companies are not doing enough to protect their valuable proprietary information and that the process of protecting trade secrets is organic, in that, all businesses should constantly update their trade secret secret protection programs in response to ever changing conditions and threats. For example, the threat of foreign economic espionage, especially by Chinese entities, has greatly increased over the past several years.

Please read the article if you’re interested in learning more about this important subject.

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