While a separate article discusses in more detail how to legally and practically protect your business from industrial espionage, basic measures to mitigate risk include: restrict departing employees` access to confidential information; promptly verify confidential information accessed by a former employee to determine whether the information has been downloaded or copied; and require employees who leave the company to declare that they have not downloaded company information or that they do not have company information in their possession. If the trade secret is sold to a U.S. company, the convicted thief or buyer can spend up to 20 years in jail and pay a fine. If the thief or buyer is an organization, the fine can be as high as $5 million. When the charge is to steal trade secrets in order to give them to a foreign government, whether the money changes hands or not, it is usually referred to as industrial espionage. If the thief is an organization, he can be fined $10 million or three times the value of the secret, including his search costs. The first person convicted of industrial espionage was a retired Boeing engineer, “Chuck” Chung, who passed on space shuttle technology to the Chinese government. He was sentenced to 15 years and 8 months in prison in 2009. Two important hearings were held in 1996 to examine the need for federal legislation to prevent the theft of trade secrets resulting from industrial espionage. The main witness in both hearings was the Honourable Justice Louis. Freeh, Director of the Federal Bureau of Investigation (“FBI”). He was convinced that a number of industry leaders, primarily representing Silicon Valley and aerospace companies, needed new federal legislation.

The organized association of the intellectual property bar played no role in the hearings themselves, although since the 1970s the intellectual property law section of the American Bar Association “has advocated the enactment of a federal criminal law applicable, in appropriate circumstances, to the misappropriation of trade secrets.” [2] The Industrial Espionage Act of 1996 (EEA) is a law that makes the theft or misappropriation of trade secrets, primarily through industrial espionage, a federal crime. In addition to the civil law consequences, many cases of industrial espionage also have a criminal law aspect. This is especially true when it comes to criminal activities such as burglary or trespassing. Espionage can also involve several white-collar crimes, such as altering corporate documents or conducting insider trading. Those accused of industrial espionage may also face criminal consequences such as jail time or fines. One person`s garbage may be another person`s treasure, but not in cases of industrial espionage where “reasonable steps” are taken to keep the information secret and the information is used for economic purposes. In Novell, Inc. v. Weird Stuff, Inc., Novell, a company that develops various types of computer hardware and software, sued Mark and Rick Gold (the “Gold Brothers”) and Weird Stuff, Inc. for trademark infringement, copyright infringement and false designation of origin in connection with its NetWare software.

No. C92-20467 JW/EAI, 1993 U.S. Dist. LEXIS 6674 (N.D. Cal. 14 May 1993). With respect to point (2) – i.e. the inadequacy of the federal laws in force at the time – Director Freeh cited the Supreme Court`s Dowling decision[5] that trade secrets were not physical “goods, goods or merchandise” and that the Interstate Transportation of Hehlen Property Act of 1930 [6] did not apply to industrial espionage. Similarly, the Mail Fraud Act[7] would only apply to industrial espionage involving the use of mail, and the Electronic Fraud Act[8] requires intent to defraud, as well as the use of cable, radio or television. In particular, tech companies are vulnerable to industrial espionage, especially new ideas or technology products. For example, biotech companies, software companies, and automotive companies tend to be targets of industrial espionage.

Disclosure of stolen property or stolen trade secrets can also be considered espionage. Industrial espionage can be carried out by a person acting on its behalf. An example of this is when a dissatisfied employee breaks into their employer`s business records to cause damage to the business. Espionage can also take place on behalf of a competing company. An example of an action on behalf of another company is when a company hires an employee (or external party) to illegally investigate its competitor`s activities. Regarding point (1), Director Freeh indicated that at the time, the FBI was investigating allegations of industrial espionage made against the United States by as many as 23 different countries. The target group covered the entire spectrum of successful US high-tech industries. [4] Industrial espionage occurs when a person or party has access to illegal, unethical or illegal information held by a company. The term “espionage” is synonymous with “espionage.” Therefore, industrial espionage includes illegal observation of commercial activities, illegal eavesdropping (e.g., eavesdropping), and illegal access to company information, all of which constitute corporate espionage.

Industrial espionage: Criminalizes the misappropriation of trade secrets (including conspiracy to divert trade secrets and the subsequent acquisition of such misappropriated trade secrets) knowing or with the intent that the theft will benefit a foreign power. Penalties for violations include fines of up to $500,000 per violation, jail terms of up to 15 years for individuals, and fines of up to $10 million for organizations. Industrial espionage refers to various activities carried out with the aim of gaining an unfair competitive advantage and not for national security purposes. As we discussed in a previous article, the ways in which industrial espionage can affect a business are numerous and include the theft of trade secrets and operational disruptions.