[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1556 Reported in Senate (RS)]





                                                       Calendar No. 546

104th CONGRESS

  2d Session

                                S. 1556

_______________________________________________________________________

                                 A BILL

To prohibit economic espionage, to provide for the protection of United 
   States proprietary economic information in interstate and foreign 
                   commerce, and for other purposes.

_______________________________________________________________________

                             July 30, 1996

                       Reported with an amendment
                                                       Calendar No. 546
104th CONGRESS
  2d Session
                                S. 1556

To prohibit economic espionage, to provide for the protection of United 
   States proprietary economic information in interstate and foreign 
                   commerce, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 1, 1996

 Mr. Kohl (for himself and Mr. Specter) introduced the following bill; 
  which was read twice and referred to the Committee on the Judiciary

                             July 30, 1996

                Reported by Mr. Hatch, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
To prohibit economic espionage, to provide for the protection of United 
   States proprietary economic information in interstate and foreign 
                   commerce, and for other purposes.

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

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Industrial Espionage Act of 
1996''.</DELETED>

<DELETED>SEC. 2. FINDINGS AND PURPOSES.</DELETED>

<DELETED>    (a) Findings.--Congress finds that--</DELETED>
        <DELETED>    (1) sustaining a healthy and competitive national 
        economy is imperative;</DELETED>
        <DELETED>    (2) the development and production of proprietary 
        economic information involves every aspect of interstate 
        commerce and business;</DELETED>
        <DELETED>    (3) the development, production, protection, and 
        lawful exchange, sale, and transfer of proprietary economic 
        information is essential to maintaining the health and 
        competitiveness of interstate commerce and the national 
        economy;</DELETED>
        <DELETED>    (4) much proprietary economic information moves in 
        interstate and foreign commerce and proprietary economic 
        information that does not move in interstate or foreign 
        commerce directly and substantially affects proprietary 
        economic information that does;</DELETED>
        <DELETED>    (5) the theft, wrongful destruction or alteration, 
        misappropriation, and wrongful conversion of proprietary 
        economic information substantially affects and harms interstate 
        commerce, costing United States firms, businesses, industries, 
        and consumers millions of dollars each year; and</DELETED>
        <DELETED>    (6) enforcement of existing State laws protecting 
        proprietary economic information is frustrated by the ease with 
        which stolen or wrongfully appropriated proprietary economic 
        information is transferred across State and national 
        boundaries.</DELETED>
<DELETED>    (b) Purpose.--The purpose of this Act is to promote the 
development and lawful utilization of United States proprietary 
economic information produced for, or placed in, interstate and foreign 
commerce by protecting it from theft, wrongful destruction or 
alteration, misappropriation, and conversion.</DELETED>

<DELETED>SEC. 3. PREVENTION OF ECONOMIC ESPIONAGE AND PROTECTION OF 
              PROPRIETARY ECONOMIC INFORMATION IN INTERSTATE AND 
              FOREIGN COMMERCE.</DELETED>

<DELETED>    (a) In General.--Title 18, United States Code, is amended 
by inserting after chapter 89 the following new chapter:</DELETED>

       <DELETED>``CHAPTER 90--PROTECTION OF PROPRIETARY ECONOMIC 
                         INFORMATION</DELETED>

<DELETED>``Sec.
<DELETED>``1831. Definitions.
<DELETED>``1832. Criminal activities affecting proprietary economic 
                            information.
<DELETED>``1833. Criminal forfeiture.
<DELETED>``1834. Import and export sanctions.
<DELETED>``1835. Extraterritoriality.
<DELETED>``1836. Construction with other laws.
<DELETED>``1837. Preservation of confidentiality.
<DELETED>``1838. Law enforcement and intelligence activities.
<DELETED>``Sec. 1831. Definitions</DELETED>
<DELETED>    ``As used in this chapter:</DELETED>
        <DELETED>    ``(1) The term `person' means a natural person, 
        corporation, agency, association, institution, or any other 
        legal, commercial, or business entity.</DELETED>
        <DELETED>    ``(2) The term `proprietary economic information' 
        means all forms and types of financial, business, scientific, 
        technical, economic, or engineering information, including, but 
        not limited to, data, plans, tools, mechanisms, compounds, 
        formulas, designs, prototypes, processes, procedures, programs, 
        codes, or commercial strategies, whether tangible or 
        intangible, and however stored, compiled, or memorialized, if--
        </DELETED>
                <DELETED>    ``(A) the owner has taken reasonable 
                measures to keep such information confidential; 
                and</DELETED>
                <DELETED>    ``(B) the information derives independent 
                economic value, actual or potential, from not being 
                generally known to, and not being readily 
                ascertainable, acquired, or developed by legal means by 
                the public.</DELETED>
        <DELETED>    ``(3) The term `owner' means the United States 
        person or persons in whom, or United States Government 
        component, department, or agency in which, rightful legal, 
        beneficial, or equitable title to, or license in, proprietary 
        economic information is reposed.</DELETED>
        <DELETED>    ``(4) The term `United States person' means--
        </DELETED>
                <DELETED>    ``(A) in the case of a natural person, a 
                United States citizen or permanent resident alien; 
                and</DELETED>
                <DELETED>    ``(B) in the case of a nonnatural person, 
                an entity substantially owned or controlled by the 
                United States Government or by United States citizens 
                or permanent resident aliens, or incorporated in the 
                United States.</DELETED>
<DELETED>``Sec. 1832. Criminal activities affecting proprietary 
              economic information</DELETED>
<DELETED>    ``(a) Any person, with intent to, or reason to believe 
that it will, injure any owner of proprietary economic information 
having a value of not less than $100,000 that is produced for, or 
placed in, interstate commerce, and with intent to convert it to his or 
her own direct use or benefit or the direct use or benefit of another, 
knowingly--</DELETED>
        <DELETED>    ``(1) steals, wrongfully appropriates, takes, 
        carries away, or conceals, or by fraud, artifice, or deception 
        obtains such information;</DELETED>
        <DELETED>    ``(2) wrongfully copies, duplicates, sketches, 
        draws, photographs, downloads, uploads, alters, destroys, 
        photocopies, or replicates such information;</DELETED>
        <DELETED>    ``(3) receives, buys, or possesses such 
        information, knowing the same to have been stolen or wrongfully 
        appropriated, obtained, or converted;</DELETED>
        <DELETED>    ``(4) attempts to commit any offense described in 
        paragraphs (1) through (3);</DELETED>
        <DELETED>    ``(5) wrongfully solicits another to commit any 
        offense described in paragraphs (1) through (3); or</DELETED>
        <DELETED>    ``(6) conspires with one or more other persons to 
        commit any offense described in paragraphs (1) through (3), and 
        one or more of such persons do any act to effect the object of 
        the conspiracy,</DELETED>
<DELETED>shall, except as provided in subsection (b), be fined not more 
than $250,000 or imprisoned not more than 15 years, or both.</DELETED>
<DELETED>    ``(b) Any corporation that commits any offense described 
in paragraphs (1) through (6) of subsection (a) shall be fined not more 
than $10,000,000.</DELETED>
<DELETED>``Sec. 1833. Criminal forfeiture</DELETED>
<DELETED>    ``(a) Notwithstanding any provision of State law, any 
person convicted of a violation under this chapter shall forfeit to the 
United States--</DELETED>
        <DELETED>    ``(1) any property constituting or derived from, 
        any proceeds the person obtained, directly or indirectly, as 
        the result of such violation; and</DELETED>
        <DELETED>    ``(2) any of the person's property used, or 
        intended to be used, in any manner or part to commit or 
        facilitate the commission of such violation.</DELETED>
<DELETED>    ``(b) The court, in imposing a sentence on such person, 
shall order, in addition to any other sentence imposed pursuant to this 
chapter, that the person forfeit to the United States all property 
described in this section.</DELETED>
<DELETED>    ``(c) Property subject to forfeiture under this section, 
any seizure and disposition thereof, and any administrative or judicial 
proceeding in relation thereto, shall be governed by section 413 of the 
Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 
853), except for subsection 413(d) which shall not apply to forfeitures 
under this section.</DELETED>
<DELETED>    ``(d) Notwithstanding section 524(c) of title 28, there 
shall be deposited in the Crime Victims Fund established under section 
1402 of the Victims of Crime Act of 1984 (42 U.S.C. 10601) all amounts 
from the forfeiture of property under this section remaining after the 
payment of expenses and sale authorized by law.</DELETED>
<DELETED>``Sec. 1834. Import and export sanctions</DELETED>
<DELETED>    ``(a) The President may prohibit for a period of up to 3 
years, the importation into, or exportation from, the United States of 
any product produced, made, assembled, or manufactured by a person 
convicted of any offense described in section 1832.</DELETED>
<DELETED>    ``(b) The Attorney General may impose a civil penalty not 
to exceed 5 times the value of the exports or imports involved or 
$100,000, whichever is greater, against any person who knowingly 
violates any order of the President issued under the authority of this 
section. Such penalty may be imposed only after notice and opportunity 
for a hearing on the record in accordance with sections 554 through 557 
of title 5.</DELETED>
<DELETED>``Sec. 1835. Extraterritoriality</DELETED>
<DELETED>    ``(a) This chapter applies to conduct occurring within the 
United States.</DELETED>
<DELETED>    ``(b) This chapter applies to conduct occurring outside 
the territorial and special maritime jurisdiction of the United States, 
its territories, and possessions if--</DELETED>
        <DELETED>    ``(1) the offender is a United States person; 
        or</DELETED>
        <DELETED>    ``(2) the victim of the offense is an owner (as 
        defined in section 1831), and the offense was intended to have, 
        or had, an effect in the United States.</DELETED>
<DELETED>``Sec. 1836. Construction with other laws</DELETED>
<DELETED>    ``This chapter shall not be construed to preempt or 
displace any other Federal or State remedies, whether civil or 
criminal, for the misappropriation of proprietary economic information, 
or to affect the otherwise lawful disclosure of information by any 
government employee under section 552 of title 5 (commonly known as the 
Freedom of Information Act).</DELETED>
<DELETED>``Sec. 1837. Preservation of confidentiality</DELETED>
<DELETED>    ``In any prosecution under this chapter, the court may 
enter such orders and take such other action as may be necessary and 
appropriate to preserve the confidentiality of proprietary economic 
information, consistent with rule 16 of the Federal Rules of Criminal 
Procedure, the Federal Rules of Evidence, and other applicable laws. An 
interlocutory appeal by the United States shall lie from a decision or 
order of a district court authorizing the disclosure of proprietary 
economic information.</DELETED>
<DELETED>``Sec. 1838. Law enforcement and intelligence 
              activities</DELETED>
<DELETED>    ``This chapter does not prohibit any lawfully authorized 
investigative, protective, or intelligence activity of a law 
enforcement agency of the United States, a State, or a political 
subdivision of a State, or an intelligence agency of the United 
States.''.</DELETED>
<DELETED>    (b) Technical Amendment.--The table of chapters for title 
18, United States Code, is amended by inserting after the item relating 
to chapter 89 the following new item:</DELETED>

<DELETED>``90. Protection of Proprietary Economic               1831''.
                            Information.

<DELETED>SEC. 4. WIRE AND ELECTRONIC COMMUNICATIONS INTERCEPTION AND 
              INTERCEPTION OF ORAL COMMUNICATIONS.</DELETED>

<DELETED>    Section 2516(1)(a) of title 18, United States Code, is 
amended by inserting ``chapter 90 (relating to economic espionage and 
protection of proprietary economic information in interstate and 
foreign commerce),'' after ``title:''.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Industrial Espionage Act of 1996''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) sustaining a healthy and competitive national economy 
        is imperative;
            (2) the development and production of proprietary economic 
        information involves every aspect of interstate commerce and 
        business;
            (3) the development, production, protection, and lawful 
        exchange, sale, and transfer of proprietary economic 
        information is essential to maintaining the health and 
        competitiveness of interstate commerce and the national 
        economy;
            (4) much proprietary economic information moves in 
        interstate and foreign commerce and proprietary economic 
        information that does not move in interstate or foreign 
        commerce directly and substantially affects proprietary 
        economic information that does;
            (5) the theft, wrongful destruction or alteration, 
        misappropriation, and wrongful conversion of proprietary 
        economic information substantially affects and harms interstate 
        commerce, costing United States firms, businesses, industries, 
        and consumers millions of dollars each year; and
            (6) enforcement of existing State laws protecting 
        proprietary economic information is frustrated by the ease with 
        which stolen or wrongfully appropriated proprietary economic 
        information is transferred across State and national 
        boundaries.
    (b) Purpose.--The purpose of this Act is--
            (1) to promote the development and lawful utilization of 
        United States proprietary economic information produced for, or 
        placed in, interstate and foreign commerce by protecting it 
        from theft, wrongful destruction or alteration, 
        misappropriation, and conversion; and
            (2) to secure to authors and inventors the exclusive right 
        to their respective writings and discoveries.

SEC. 3. PREVENTION OF ECONOMIC ESPIONAGE AND PROTECTION OF PROPRIETARY 
              ECONOMIC INFORMATION IN INTERSTATE AND FOREIGN COMMERCE.

    (a) In General.--Title 18, United States Code, is amended by 
inserting after chapter 89 the following new chapter:

      ``CHAPTER 90--PROTECTION OF PROPRIETARY ECONOMIC INFORMATION

``Sec.
``1831. Definitions.
``1832. Criminal activities affecting proprietary economic information.
``1833. Criminal forfeiture.
``1834. Import and export sanctions.
``1835. Extraterritoriality.
``1836. Construction with other laws.
``1837. Preservation of confidentiality.
``1838. Prior authorization requirement.
``1839. Law enforcement and intelligence activities.
``Sec. 1831. Definitions
    ``As used in this chapter:
            ``(1) The term `person' means a natural person, 
        corporation, agency, association, institution, or any other 
        legal, commercial, or business entity.
            ``(2) The term `proprietary economic information' means all 
        forms and types of financial, business, scientific, technical, 
        economic, or engineering information, including data, plans, 
        tools, mechanisms, compounds, formulas, designs, prototypes, 
        processes, procedures, programs, codes, or commercial 
        strategies, whether tangible or intangible, and whether stored, 
        compiled, or memorialized physically, electronically, 
        graphically, photographically, or in writing that--
                    ``(A) the owner thereof has taken reasonable 
                measures to keep such information confidential; and
                    ``(B) the information derives independent economic 
                value, actual or potential, from not being generally 
                known to, and not being readily ascertainable, 
                acquired, or developed by legal means by the public.
        The term does not include any general knowledge, experience, 
        training, or skill that a person lawfully has acquired due to 
        his work as an employee of or as an independent contractor for 
        any person.
            ``(3) The term `owner' means the States person or persons 
        in whom, or United States Government component, department, or 
        agency in which, rightful legal, beneficial, or equitable title 
        to, or license in, proprietary economic information is reposed.
            ``(4) The term `United States person' means--
                    ``(A) in the case of a natural person, a United 
                States citizen or permanent resident alien; and
                    ``(B) in the case of a nonnatural person, an entity 
                substantially owned or controlled by the United States 
                Government or by United States citizens or permanent 
                resident aliens, or incorporated in the United States.
            ``(5) The term `without authorization' means not permitted, 
        expressly or implicitly, by the owner.
``Sec. 1832. Criminal activities affecting proprietary economic 
              information
    ``(a) Any person, with intent to, or reason to believe that it 
will, injure any owner of proprietary economic information having a 
value of not less than $100,000 and with intent to convert it to his or 
her own use or benefit or the use or benefit of another, knowingly--
            ``(1) steals, or without authorization appropriates, takes, 
        carries away, or conceals, or by fraud, artifice, or deception 
        obtains such information;
            ``(2) without authorization copies, duplicates, sketches, 
        draws, photographs, downloads, uploads, alters, destroys, 
        photocopies, replicates, transmits, delivers, sends, mails, 
        communicates, or conveys such information;
            ``(3) receives, buys, or possesses such information, 
        knowing the same to have been stolen or appropriated, obtained, 
        or converted without authorization;
            ``(4) attempts to commit any offense described in 
        paragraphs (1) through (3);
            ``(5) wrongfully solicits another to commit any offense 
        described in paragraphs (1) through (3); or
            ``(6) conspires with one or more other persons to commit 
        any offense described in paragraphs (1) through (3), and one or 
        more of such persons do any act to effect the object of the 
        conspiracy,
shall, except as provided in subsection (b), be fined up to $250,000, 
or twice the value of the proprietary economic information, whichever 
is greater, or imprisoned not more than 10 years, or both.
    ``(b) Any corporation that commits any offense described in 
paragraphs (1) through (6) of subsection (a) shall be fined up to 
$10,000,000, or twice the economic value of the proprietary economic 
information, whichever is greater.
    ``(c) This section does not prohibit the reporting of any suspected 
criminal activity or regulatory violation to any appropriate agency or 
instrumentality of the United States, or a political subdivision of a 
State, or to Congress.
``Sec. 1833. Criminal forfeiture
    ``(a) Notwithstanding any provision of State law, any person 
convicted of a violation under this chapter shall forfeit to the United 
States--
            ``(1) any property constituting or derived from, any 
        proceeds the person obtained, directly or indirectly, as the 
        result of such violation; and
            ``(2) any of the person's property used, or intended to be 
        used, in any manner or part to commit or facilitate the 
        commission of such violation.
    ``(b) The court, in imposing a sentence on such person, shall 
order, in addition to any other sentence imposed pursuant to this 
chapter, that the person forfeit to the United States all property 
described in this section.
    ``(c) Property subject to forfeiture under this section, any 
seizure and disposition thereof, and any administrative or judicial 
proceeding in relation thereto, shall be governed by section 413 of the 
Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 
853), except for subsection 413(d) which shall not apply to forfeitures 
under this section.
    ``(d) Notwithstanding section 524(c) of title 28, there shall be 
deposited in the Crime Victims Fund established under section 1402 of 
the Victims of Crime Act of 1984 (42 U.S.C. 10601) all amounts from the 
forfeiture of property under this section remaining after the payment 
of expenses and sale authorized by law.
``Sec. 1834. Import and export sanctions
    ``(a) The President may, to the extent consistent with 
international agreements to which the United States is a party, 
prohibit, for a period of not longer than 5 years, the importation 
into, or exportation from, the United States, whether by carriage of 
tangible items or by transmission, any merchandise produced, made, 
assembled, or manufactured by a person convicted of any offense 
described in section 572 of this title, or in the case of an 
organization convicted of any offense described in such section, its 
successor entity or entities.
    ``(b)(1) The Secretary of the Treasury may impose on any person who 
knowingly violates any order of the President issued under the 
authority of this section, a civil penalty equal to not more than 5 
times the value of the exports or imports involved, or $100,000, 
whichever is greater.
    ``(2) Any merchandise imported or exported in violation of an order 
of the President issued under this section shall be subject to seizure 
and forfeiture in accordance with sections 602 through 619 of the 
Tariff Act of 1930.
    ``(3) The provisions of law relating to seizure, summary and 
judicial forfeiture, and condemnation of property for violation of the 
United States customs laws, the disposition of such property or the 
proceeds from the sale thereof, the remission or mitigation of such 
forfeiture, and the compromise of claims, shall apply to seizures and 
forfeitures incurred, or alleged to have been incurred under this 
section to the extent that they are applicable and not inconsistent 
with the provisions of this chapter.
``Sec. 1835. Extraterritoriality
    ``(a) This chapter applies to conduct occurring within the United 
States.
    ``(b) This chapter applies to conduct occurring outside the 
territorial and special maritime jurisdiction of the United States, its 
territories, and possessions if--
            ``(1) the offender is a United States person; or
            ``(2) an act in furtherance of the offense was committed in 
        the United States.
``Sec. 1836. Construction with other laws
    ``This chapter shall not be construed to preempt or displace any 
other Federal or State remedies, whether civil or criminal, for the 
misappropriation of proprietary economic information, or to affect the 
otherwise lawful disclosure of information by any government employee 
under section 552 of title 5 (commonly known as the Freedom of 
Information Act).
``Sec. 1837. Preservation of confidentiality
    ``In any prosecution under this chapter, the court may enter such 
orders and take such other action as may be necessary and appropriate 
to preserve the confidentiality of proprietary economic information, 
consistent with rule 16 of the Federal Rules of Criminal Procedure, the 
Federal Rules of Evidence, and other applicable laws. An interlocutory 
appeal by the United States shall lie from a decision or order of a 
district court authorizing the disclosure of proprietary economic 
information.
``Sec. 1838. Prior authorization requirement
    ``The United States may not file a charge under this chapter or use 
a violation of this chapter as a predicate offense under any other law 
without the personal approval of the Attorney General, the Deputy 
Attorney General, or the Assistant Attorney General for the criminal 
Division of the Department of Justice.
``Sec. 1839. Law enforcement and intelligence activities
    ``This chapter does not prohibit any and shall not impair otherwise 
lawful activity conducted by an agency or instrumentality of the United 
States, a State, or a political subdivision of a State, or an 
intelligence agency of the United States.''.
    (b) Technical Amendment.--The table of chapters for title 18, 
United States Code, is amended by inserting after the item relating to 
chapter 89 the following new item:

``90. Protection of Proprietary Economic Information........    1831''.

SEC. 4. WIRE AND ELECTRONIC COMMUNICATIONS INTERCEPTION AND 
              INTERCEPTION OF ORAL COMMUNICATIONS.

    Section 2516(1)(a) of title 18, United States Code, is amended by 
inserting ``chapter 90 (relating to economic espionage and protection 
of proprietary economic information in interstate and foreign 
commerce),'' after ``title:''.