What is the Economic Espionage Act?

The Economic Espionage Act (EEA) is a US Federal law established in 1996 that makes stealing trade secrets a criminal offense, and thus punishable. Prior to the establishment of the Economic Espionage Act, the Uniform Trade Secrets Act (UTSA) of 1970 made theft of trade secrets a civil offense, and those who illegally profited from such theft could be sued for the profits that should have belonged to the company holding the trade secret.

However, theft of trade secrets through coercion, blackmail, outright theft, or by stumbling across a trade secret did not seem to be successfully deterred by the UTSA. Thus those suffering from losses of profits sought to make theft a criminal offense.

In the terms of the Act, a trade secret is defined as something that has been reasonably protected as secret, and has economic independence because of its secrecy. A trade secret may also be tangible or intangible, thus an idea can be stolen just as easily as a formula or a product.

Not only does the Economic Espionage Act allow for criminal prosecution of those who have stolen a trade secret, but it also allows for criminal prosecution of those who attempt to steal a secret. Punishment can be quite significant.

Theft of a trade secret by a company or an individual can be punishable with up to 15 years of jail time, and up to 500,000 US dollars (USD) in fines. Both maximum fines and punishment may be assessed according to the severity of the theft as set forth by the Economic Espionage Act.

Additionally, the Act states that property acquired as a result of the theft, either directly or indirectly may have to be forfeited to the company who was entitled to the trade secret. Thus a person who steals a trade secret, uses it, and uses the profits to purchase a house, might have to forfeit that house.

The Economic Espionage Act also applies to foreign companies that steal US trade secrets and then attempt to sell the result of those secrets in the US. It is more difficult to enforce the Act in relationship to stolen trade secrets that are used to market products outside of the US, unless a foreign government is equally willing to enforce the law.

Some companies feel uncomfortable pursuing prosecution under the Economic Espionage Act. In a public proceeding like a trial, it may be possible that a trade secret that is stolen cannot be protected in order to prove that it was secret. Others feel the EEA firmly establishes the trade secret as a secret, thus allowing for easier prosecution and civil lawsuits if someone other than the owner of the secret attempts to use it.