October 23, 2018

Report: “Foreign Spies Stealing US Economic Secrets In CyberSpace”

The Federal Government just released a report that found that “Foreign economic collection and industrial espionage against the United States represent significant and growing threats to the nation’s prosperity and security.”

The Report,  “Foreign Spies Stealing U.S. Economic Secrets in Cyberspace: Report to Congress on Foreign Economic Collection and Industrial Espionage, 2009-2011,” finds that foreign agents collect sensitive economic information from U.S. companies and are able to operate in cyberspace with little chance of detection.  The report paints a grim picture of the threat to the United States posed by “foreign economic collection and industrial espionage” stating that it represents “significant and growing threats to the nation’s prosperity and security.  Cyberspace—where most business activity and development of new ideas now takes place—amplifies these threats by making it possible for malicious actors, whether they are corrupted insiders or foreign intelligence services (FIS), to quickly steal and transfer massive quantities of data while remaining anonymous and hard to detect.”

The Report further states that: “Economic espionage inflicts costs on companies that range from loss of unique intellectual property to outlays for remediation, but no reliable estimates of the monetary value of these costs exist.  Many companies are unaware when their sensitive data is pilfered, and those that find out are often reluctant to report the loss, fearing potential damage to their reputation with investors, customers, and employees.  Moreover, victims of trade secret theft use different methods to estimate their losses: some base estimates on the actual costs of developing the stolen information, while others, project the loss of future revenues and profits.”

The Report specifically identifies China and Russia as being the most “active and persistent perpetrators of economic espionage” and details recent insider thefts of corporate trade secrets with a link to China.  Note: that the Report does not mention that a former Motorola employee, Hanjuan Jin, has been charged in a plot to steal cellular telephone technology from Motorola and to provide it to a Chinese competitor looking to work with the Chinese military.  A bench trial on these charges began on November 7, 2011, in Chicago.  The court is expected to issue its decision in December.

The obvious issues arising from the Report are whether Congress will provide U.S. companies with additional tools to fight economic espionage by enacting, for example, a civil economic espionage act with broad jurisdiction, and, even if Congress does act, will U.S. companies begin to do more to protect their intellectual property?

My book, Intellectual Property Computer Crimes,”  (Law Journal Press 2003) contains a very detailed and up to-date analysis of the EEA, including a description of all cases that the government has brought to-date.  (To purchase my book click here).

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