During Chinese President Xi Jinping’s recent visit to the United States, President Obama announced that the U.S. and China reached a common understanding not to “conduct or knowingly support” cyber espionage and intellectual property theft for commercial gain. Such a high level announcement only highlights the increasing cyber threats to American companies and citizens. The U.S. government, however, has been concerned with intellectual property theft and cyber espionage for many years.
The U.S. Congress first enacted legislation directed at the intellectual property theft of trade secrets in 1996 in the Economic Espionage Act. The original Economic Espionage Act was directed toward ‘a trade secret that is related to or included in a product that is produced for or placed in interstate or foreign commerce.” However, in 2012, Congress amended the Act to include a “prohibition against the theft of trade secrets to a trade secret that is related to a product or service used in or intended for use in interstate or foreign commerce.”[1]
The Economic Espionage Act was emended in 2012 because of the decision in the case United States v. Aleynikov.[2] The facts of Aleynikov involved a computer programmer, Sergey Aleynikov, who removed over 500,000 lines of source code from his employer, Goldman Sachs & Co., on his last day of work. Mr. Aleynikov then used at least portions of the source code with a competitor of Goldman Sachs & Co.
The U.S. convicted Mr. Aleynikov under the Economic Espionage Act for the theft of the source code, but Mr. Aleynikov appealed this conviction. On appeal, the Federal Court of Appeals for the Second Circuit construed the original language of the Economic Espionage Act narrowly. In the ruling, the Court found that the Economic Espionage Act only applied to “products” that were “produced for” or “placed in” interstate commerce or foreign commerce. The Court overturned Mr. Aleynikov’s conviction since the Court found that since the stolen source code was not “produced for” or “placed in” interstate commerce or foreign commerce.
The U.S. Congress corrected this narrow interpretation with the amendment in 2012 to expand the original Economic Espionage Act to include “products and services” and “that is produced for or placed in” interstate or foreign commence. Under the amended Economic Espionage Act, it may be a crime if intellectual property relating to a product or service is stolen by cyber espionage from a person or a business.
The amendment of the Economic Espionage Act illustrates that the U.S.’s on-going concern regarding the theft of intellectual property, and the agreement between the U.S. and China further confirms that cyber espionage will continue to be an issue for American companies and citizens.
[1] https://www.congress.gov/112/plaws/publ236/PLAW-112publ236.pdf
[2] http://www.ca2.uscourts.gov/decisions/isysquery/c7b41717-8065-4631-8221-353d801767e0/2/doc/11-1126_complete_opn.pdf