Fighting computer espionage

In 1996, Congress passed the first federal law making it a crime to steal

trade secret information. At the time, the sponsors of the Economic Espionage

Act hailed the law as "a significant bipartisan accomplishment" designed

to protect many kinds of confidential information, whether maintained in

hard copy or in a computer. However, the act's history shows it as more

of a paper tiger than a major accomplishment.

When the Economic Espionage Act was passed, the Clinton administration

stated that no case would be brought in the first five years unless personally

approved by the attorney general or another senior Justice Department official.

The number of cases brought since then can be counted on just two hands.

In part, this record reflects how hard trade secrets cases are to prove.

In United States v. Yang, two people were convicted of stealing trade secret

information under the Economic Espionage Act. However, the conviction depended

on a government sting operation requiring the cooperation of the individual

who had been selling the data to the defendants.

One of the problems with a criminal trade secrets case is the level

of information that must be disclosed to prosecute the case successfully.

In general, a criminal defendant may claim as a defense that the information

at issue was not, in fact, a valuable trade secret. To counter that defense,

the prosecution may have to reveal even more confidential information than

was stolen in the first place.

However, that problem was avoided in United States v. Kai-Lo HSU. In

that case, the defendants were indicted for the "attempted theft of trade

secrets." According to the court, the prosecution was not required to prove

that the information at issue constituted a trade secret because the defendants

were never charged with the actual theft of trade secrets, only with the

attempt. According to the court, a person could be guilty of attempted theft

of trade secrets even if the stolen information had no real value.

In addition to the criminal provisions of the Economic Espionage Act,

the law authorizes the attorney general to file civil suits in appropriate

cases. However, the act does not create a private right of action. In fact,

no federal law allows one company to sue another company or an individual

to protect its trade secrets, although such suits may be brought under the

laws of most states.

Given the large number of computer intrusion incidents reported in recent

months, it is obvious that the Economic Espionage Act's criminalization

of trade secrets cases has not had much of a deterrent effect. Whether the

law should be retained and improved, or another alternative pursued instead,

is a matter that Congress should consider.

—Peckinpaugh is corporate counsel for DynCorp, Reston, Va. This column discusses

legal topics of general interest only and is not intended to provide legal

advice. Should you have a specific question or legal problem, consult an



United States v. Yang, 74 F. Supp.2d 724 (N.D. Ohio 1999)

United States v. HSU, 155 F.3d 189 (3d Cir. 1998)

See also:

United States v. HSU, 185 F.R.D. 192 (E.D. Pa. 1999)

United States v. HSU, 40 F. Supp.2d 623 (E.D. Pa. 1999)

The Economic Espionage Act is located at 18 U.S.C. : 1831, et seq.

BY Carl Peckinpaugh
May 15, 2000

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