[Congressional Record Volume 158, Number 170 (Sunday, December 30, 2012)]
[House]
[Pages H7453-H7455]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     FOREIGN AND ECONOMIC ESPIONAGE PENALTY ENHANCEMENT ACT OF 2012

  Mr. SMITH of Texas. Mr. Speaker, I move to suspend the rules and 
concur in the Senate amendment to the bill (H.R. 6029) to amend title 
18, United States Code, to provide for increased penalties for foreign 
and economic espionage, and for other purposes.
  The Clerk read the title of the bill.
  The text of the Senate amendment is as follows:

       Senate amendment:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Foreign and Economic 
     Espionage Penalty Enhancement Act of 2012''.

     SEC. 2. PROTECTING U.S. BUSINESSES FROM FOREIGN ESPIONAGE.

       (a)For Offenses Committed by Individuals.--Section 1831(a) 
     of title 18, United States Code, is amended, in the matter 
     after paragraph (5), by striking ``not more than $500,000'' 
     and inserting ``not more than $5,000,000''.
       (b)For Offenses Committed by Organizations.--Section 
     1831(b) of such title is amended

[[Page H7454]]

     by striking ``not more than $10,000,000'' and inserting ``not 
     more than the greater of $10,000,000 or 3 times the value of 
     the stolen trade secret to the organization, including 
     expenses for research and design and other costs of 
     reproducing the trade secret that the organization has 
     thereby avoided''.

     SEC. 3. REVIEW BY THE UNITED STATES SENTENCING COMMISSION.

       (a)In General.--Pursuant to its authority under section 
     994(p) of title 28, United States Code, the United States 
     Sentencing Commission shall review and, if appropriate, amend 
     the Federal sentencing guidelines and policy statements 
     applicable to persons convicted of offenses relating to the 
     transmission or attempted transmission of a stolen trade 
     secret outside of the United States or economic espionage, in 
     order to reflect the intent of Congress that penalties for 
     such offenses under the Federal sentencing guidelines and 
     policy statements appropriately, reflect the seriousness of 
     these offenses, account for the potential and actual harm 
     caused by these offenses, and provide adequate deterrence 
     against such offenses.
       (b)Requirements.--In carrying out this section, the United 
     States Sentencing Commission shall--
       (1) consider the extent to which the Federal sentencing 
     guidelines and policy statements appropriately account for 
     the simple misappropriation of a trade secret, including the 
     sufficiency of the existing enhancement for these offenses to 
     address the seriousness of this conduct;
       (2) consider whether additional enhancements in the Federal 
     sentencing guidelines and policy statements are appropriate 
     to account for--
       (A) the transmission or attempted transmission of a stolen 
     trade secret outside of the United States; and
       (B) the transmission or attempted transmission of a stolen 
     trade secret outside of the United States that is committed 
     or attempted to be committed for the benefit of a foreign 
     government, foreign instrumentality, or foreign agent;
       (3) ensure the Federal sentencing guidelines and policy 
     statements reflect the seriousness of these offenses and the 
     need to deter such conduct;
       (4) ensure reasonable consistency with other relevant 
     directives, Federal sentencing guidelines and policy 
     statements, and related Federal statutes;
       (5) make any necessary conforming changes to the Federal 
     sentencing guidelines and policy statements; and
       (6) ensure that the Federal sentencing guidelines 
     adequately meet the purposes of sentencing as set forth in 
     section 3553(a)(2) of title 18, United States Code.
       (c)Consultation.--In carrying out the review required under 
     this section, the Commission shall consult with individuals 
     or groups representing law enforcement, owners of trade 
     secrets, victims of economic espionage offenses, the United 
     States Department of Justice, the United States Department of 
     Homeland Security, the United States Department of State and 
     the Office of the United States Trade Representative.
       (d)Review.--Not later than 180 days after the date of 
     enactment of this Act, the Commission shall complete its 
     consideration and review under this section.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Smith) and the gentleman from Virginia (Mr. Scott) each will 
control 20 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. SMITH of Texas. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks and include extraneous materials on the matter currently 
under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. SMITH of Texas. Mr. Speaker, I yield myself as much time as I may 
consume.
  First of all, I want to thank Judiciary Committee Chairman-elect Bob 
Goodlatte, Ranking Member John Conyers, and IP Subcommittee Ranking 
Member Mel Watt for their work on this bill.
  Mr. Speaker, the Foreign and Economic Espionage Penalty Enhancement 
Act of 2012 deters and pushes criminals who target U.S. economic and 
security interests on behalf of foreign interests.
  In a dynamic and globally connected information economy, the 
protection of intangible assets is vital, not only to the success of 
individual enterprises, but also to the future of entire industries.
  In recent years, cybercriminals have shifted from the theft of 
personal information such as credit cards and Social Security numbers 
to the theft of corporate intellectual capital.
  Our intelligence community has warned us that foreign interests place 
a high priority on acquiring sensitive U.S. economic information and 
technologies. In the U.S., the Economic Espionage Act serves as a 
primary tool the Federal Government uses to protect secret, valuable 
commercial information from theft.
  Our intelligence community declares that there is a ``significant and 
growing threat to our Nation's prosperity and security'' posed by 
criminals both inside and outside our borders who commit espionage. 
Congress should also recognize and confront this increasing threat by 
adjusting our penalties so that we can enhance deterrents and provide 
appropriate punishments for those criminals who knowingly target our 
companies for espionage.
  I urge my colleagues to support H.R. 6029 as it was amended by the 
Senate. The original bill was developed in a bipartisan manner and was 
unanimously reported by both the Judiciary Committee and this House. 
This is a commonsense and much-needed measure that deserves our full 
support.
  Mr. Speaker, I reserve the balance of my time.
  I want to thank Judiciary Committee Chairman-Elect Bob Goodlatte, 
Ranking Member John Conyers and IP Subcommittee Ranking Member Mel Watt 
for their work on this bill. It has been a privilege to serve with them 
during my tenure as Chairman and Ranking Member of the Judiciary 
Committee.
  I look forward to continuing to explore areas where we can work 
together in the 113th Congress.
  Mr. Speaker, the Foreign and Economic Espionage Penalty Enhancement 
Act of 2012 deters and punishes criminals who target U.S. economic and 
security interests on behalf of foreign interests.
  In a dynamic and globally-connected information economy, the 
protection of intangible assets is vital not only to the success of 
individual enterprises but also to the future of entire industries.
  A global study released last year by McAfee, the world's largest 
security technology company, and Science Applications International 
Corporation, concluded that corporate trade secrets and other sensitive 
intellectual capital are the newest ``currency'' of cybercriminals.
  In recent years, cybercriminals have shifted from the theft of 
personal information such as credit cards and social security numbers 
to the theft of corporate intellectual capital.
  Our intelligence community has warned us that foreign interests place 
a high priority on acquiring sensitive U.S. economic information and 
technologies.
  We know that some individuals intentionally and persistently seek out 
U.S. information and trade secrets. The most recent report from the 
Office of the National Counterintelligence Executive specifically cited 
Chinese as ``the world's most active and persistent perpetrators of 
economic espionage.''
  The report also described Russia's intelligence services as 
responsible for ``conducting a range of activities to collect economic 
information and technology from US targets.''
  In the U.S., the Economic Espionage Act (EEA) serves as the primary 
tool the federal government uses to protect secret, valuable commercial 
information from theft.
  On December 18, the House passed S. 3642, an important bill that 
clarifies the scope of protectable trade secrets.
  Since enacting the EEA in 1996, Congress has not adjusted its 
penalties to take into account the increasing importance of 
intellectual property to the economic and national security of the U.S.
  H.R. 6029, which the House unanimously passed this summer, increases 
the maximum penalties for an individual convicted of committing 
espionage on behalf of a foreign entity.
  The bill the House passed increases the maximum penalty from 15 to 20 
years imprisonment and increases the maximum fine from $500,000 to $5 
million.
  Several Senators wanted to give further consideration to the proposed 
statutory maximum increase from 15 to 20 years imprisonment.
  The Senate amended H.R. 6029 by deleting this single provision. They 
then passed it unanimously on December 19, so that we may act again and 
send this bill directly to the desk of the President.
  I thank Senators Lee and Paul along with Senators Leahy, Kohl and 
Grassley for helping to resolve concerns and advancing this measure.
  Our Intelligence community declares that there is a ``significant and 
growing threat to [our] nation's prosperity and security'' posed by 
criminals--both inside and outside our borders--who commit espionage.
  Congress should also recognize and confront this increasing threat by 
adjusting our penalties so that we may enhance deterrence and provide 
appropriate punishments for those criminals who knowingly target our 
companies for espionage.

[[Page H7455]]

  I urge my colleagues to support H.R. 6029 as it was amended by the 
Senate. The original bill was developed in a bipartisan manner and was 
unanimously reported by both the Judiciary Committee and this House. 
This is a common sense and much-needed measure that deserves our full 
support.
  Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may 
consume
  Mr. Speaker, I rise in support of the Senate amendment to H.R. 6029, 
the Foreign and Economic Espionage Penalty Enhancement Act of 2012. The 
House passed this legislation by voice vote in August, and the Senate 
recently passed a bill with amendment by unanimous consent.
  Mr. Speaker, H.R. 6029 will increase the maximum fines that may be 
imposed for engaging in the Federal offense of economic espionage. The 
crime of economic espionage consists of knowingly misappropriating 
trade secrets with the intent or knowledge that the offense will 
benefit a foreign government.
  As reported by the U.S. intellectual property enforcement 
coordinator, economic espionage is a serious threat to American 
businesses by foreign governments.

                              {time}  1800

  Economic espionage represents a significant cost to victim companies 
and threatens the economic security of the United States. This crime 
inflicts costs on companies, such as the loss of unique intellectual 
property, the loss of expenditures related to research and development, 
and the loss of future revenues and profits. Many companies are unaware 
when their sensitive data is pilfered, and those that find out are 
often reluctant to report the losses, fearing potential damage to their 
reputations with investors, customers, and employees.
  The pace of the foreign collection of economic information and 
industrial espionage activities against major United States 
corporations is accelerating. For example, in fiscal year 2011, the 
Justice Department and the FBI saw an increase of 29 percent in 
economic espionage and trade secret theft investigations compared to 
those in fiscal year 2010.
  Details related to recent Federal investigations and prosecutions 
suggest that economic espionage and trade secret theft on behalf of 
companies located in China is an emerging trend. For example, at least 
34 companies were reportedly victimized by a set of attacks originating 
in China in 2010. In the attacks, computer viruses were spread via 
emails to corporate employees, allowing the attackers to have access to 
emails and sensitive documents.
  Foreign hackers constantly target U.S. companies in such ways in 
order to get every piece of competitive intelligence information they 
can. We simply cannot allow this to continue to happen. In response to 
this growing threat, in her 2011 annual report, the U.S. Intellectual 
Property Coordinator called upon Congress to increase the penalties for 
economic espionage, and this bill is consistent with that 
recommendation.
  I would like to commend Members on both sides of the aisle for their 
work on this bill, particularly the gentleman from Texas, the chair of 
the committee, Mr. Smith; the ranking member, the gentleman from 
Michigan (Mr. Conyers); the incoming chair of the Judiciary Committee, 
my colleague from Virginia (Mr. Goodlatte); and the gentleman from 
North Carolina (Mr. Watt), who all worked very diligently on this bill. 
I also want to recognize the leadership of Senator Leahy.
  I urge my colleagues to support the Senate amendment to H.R. 6029, 
and I yield back the balance of my time.
  Mr. SMITH of Texas. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Texas (Mr. Smith) that the House suspend the rules and 
concur in the Senate amendment to the bill, H.R. 6029.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. SCOTT of Virginia. Mr. Speaker, I object to the vote on the 
ground that a quorum is not present and make the point of order that a 
quorum is not present.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this question will be postponed.
  The point of no quorum is considered withdrawn.

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