[Congressional Record: March 30, 2011 (Senate)]
[Page S1978-S1993]


      By Mr. KOHL (for himself, Mr. Whitehouse, and Mr. Coons):
  S. 678. A bill to increase the penalties for economic espionage; to 
the Committee on the Judiciary.
  Mr. KOHL. Mr. President, the ability of American companies to out 
innovate and better compete with their global competitors is more 
important today than ever. Yet, the FBI estimates that U.S. companies 
lose billions of dollars each year to criminals who steal their trade 
secrets--their innovative ideas, formulas, designs and other 
proprietary information. For example, last year, a Chinese national 
working for an American automobile manufacturer was convicted of 
stealing trade secrets for a Chinese competitor. His actions were 
estimated to cost the American company between $50 and $100 million.
  That is why I rise today with Senators Whitehouse and Coons to 
introduce the Economic Espionage Penalty Enhancement Act of 2011. This 
bill is simple and straightforward--it increases the maximum penalties 
for stealing a trade secret to benefit a foreign company. The measures 
in this bill were recommended to Congress by the U.S. Intellectual 
Property Enforcement Coordinator, in conjunction with the Departments 
of Commerce, Homeland Security, Justice and State, and the U.S. Trade 
Representative. The Economic Espionage Act Penalty Enhancement Act, 
while a modest bill, is intended to be a starting point for a larger 
discussion about the implementation of the Economic Espionage Act, EEA, 
and whether additional updates and improvements are needed in light of 
the global economy and advances in technology.
  In 1996, Congress enacted the EEA, making it a federal crime to steal 
a trade secret. Nearly fifteen years later, trade secret theft and 
economic espionage continue to pose a threat to U.S. companies to the 
tune of billions of dollars a year. As we reexamine the law, we will be 
looking at how we can help prosecutors bring more of these criminals to 
justice and companies better protect their trade secrets. Among the 
issues we will look at are whether additional protections are needed 
for trade secrets as part of EEA prosecutions, whether whistleblower 
protections should be added, and whether we need a federal civil 
private right of action.
  Businesses spend every resource at their disposal to develop 
proprietary economic information including their customer lists, 
pricing schedules, business agreements, and manufacturing processes, to 
name a few. This information is literally a business's lifeblood. 
Stealing it can be the death knell for a company. The chief executive 
of GM recently said that industrial espionage is a major threat to the 
company and that he worries about it ``every day.'' But these thefts 
have a much greater impact beyond the American company that falls 
victim to an economic spy. The economic strength, competitiveness, and 
security of our country rely upon the ability of industry to compete 
without unfair interference from foreign governments and from their own 
domestic competitors. Without freedom from economic sabotage, our 
companies lose their hard-earned advantages and their competitive edge.
  This problem is not new, but it has grown and evolved in the fifteen 
years since the Economic Espionage Act became law. U.S. corporations 
face intense competition at home and abroad. As much as 80 percent of 
the assets of today's companies are intangible trade secrets. They must 
be able to protect their trade secrets to remain competitive and keep 
our economy strong. 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. 
Within a matter of days, a U.S. corporation can lose complete control 
over its trade secrets. Unfortunately, we have many examples of the 
risk and harm posed by economic espionage. In 2009, a Chinese-born 
engineer who had been employed by a leading aerospace company was 
convicted of economic espionage and sentenced to fifteen years in 
prison for collecting sensitive information about the U.S. space 
shuttle that he intended to share with the Chinese government. Prior to 
his sentencing, the district court judge said that although we do not 
know how much information he shared with China, we do know that he hurt 
not only his former employer but also the national security of the 
United States.
  Domestic economic espionage, known as industrial espionage, can be 
just as threatening to American companies. For example, just this month 
a former computer programmer for a Wall Street bank was sentenced to 
eight years in prison for stealing secret code used in the bank's 
valuable high-frequency trading system. The trading system earned the 
bank $300 million in 2009 alone. He took a job at a startup company 
that was planning to directly compete with the Wall Street bank, and 
gave that company the stolen code.
  In my home State of Wisconsin a disgruntled employee of a company 
that manufactures aftermarket airplane parts was prosecuted under the 
economic espionage statute and sentenced to thirty months in prison for 
attempting to sell trade secrets to competitors. The trade secret--
details and measurements of particular airplane parts--took years and 
hundreds of thousands of dollars for the manufacturer to create, test 
and gain Federal Aviation Administration approval. Fortunately, the 
perpetrator was caught before he sold the trade secrets, but had he 
been successful the manufacturer would likely have been forced out of 
  The examples above illustrate the seriousness of these crimes. The 
legislation that we introduce today will increase the maximum sentence 
for economic espionage from 15 years to 20 years and to direct the 
Sentencing Commission to consider increasing the penalty range for 
theft of trade secrets and economic espionage. This is a first step in 
our efforts to do more to stem the flow of valuable business 
information out of our country. We must definitively punish anyone who 
steals information from American companies. Over the coming months, 
this measure will provide a framework for our discussions about how we 
can do more to solve this problem. I look forward to working with my 
colleagues on this critical problem.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 678

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,


       This Act may be cited as the ``Economic Espionage Penalty 
     Enhancement Act''.


       Section 1831(a) of title 18, United States Code, is amended 
     by striking ``15 years'' and inserting ``20 years''.


       Pursuant to its authority under section 994(p) of title 28, 
     United States Code, the United States Sentencing Commission 
       (1) review its guidelines and policy relating to a two-
     level enhancement for economic espionage; and
       (2) as a part of such review consider amending such 
     guidelines to--
       (A) apply the two-level enhancement to the simple 
     misappropriation of a trade secret;
       (B) apply an additional two-level enhancement if the 
     defendant transmits or attempts to transmit the stolen trade 
     secret outside of the United States and an additional three-
     level enhancement if the defendant instead commits economic 
     espionage (i.e., he/she knew or intended that the offense 
     would benefit a foreign government, foreign instrumentality, 
     or foreign agent); and
       (C) provide when a defendant transmits trade secrets 
     outside of the United States or commits economic espionage, 
     that the defendant should face a minimum offense level.