Secrets, of a political or corporate nature are of value, and to be guarded by its owners. What happens, however, when American companies start developing intellectual property in parts of the world that treats secrets as party favors, to be liberally distributed?
Losing valuable intellectual capital to the competition is akin to facing a doomsday scenario for most American businesses. What are the weapons your business has to keep? What does it develop and how does it keep out those who would take it? What happens if the theft of industrial trade secrets is tacitly approved by a country which has state owned companies in the same business?
In 1996 the United States Legislature enacted the Economic Espionage Act. Economic espionage is (1) whoever knowingly performs targeting or acquisition of trade secrets to (2) knowingly benefit any foreign government, foreign instrumentality, or foreign agent. The teeth of the Act make stealing economic information for the benefit of another state a federal crime punishable by up to 10 years confinement. In addition to criminal liability, the Department of Justice can initiate a civil action to enjoin the perpetrators from disclosing the trade secrets. Unmentioned in the Act is compensation for the victim - American business.
The mention of “agents” or “espionage” gives off the aroma of a Tom Clancy novel, but economic espionage is far from fiction. A recent study estimated that such economic espionage accounted for the loss of between one and six million jobs and billions of American dollars. Predictably, China and Russia have been the most egregious when it comes to economic espionage; their “agents” having siphoned off protected information from GM, Intel, Lockheed Martin, and Hughes Aircraft to name a few. This stolen information is not only comprised of new developments within an industry, but these agents have targeted customer data, development data, pricing schemes, marketing plans, production costs, and sales strategies.
Despite the steps that the U.S. government has taken to protect American business, the hounds of civil justice remain leashed. Domestically, the civil courts redress wrongs like the theft and misappropriation of trade secrets committed by individuals within U.S. borders. Unfortunately, for many years foreign states have operated with relative impunity while gorging themselves on our economic viability. Sadly, foreign relations have trumped economic security.
There could be a thin glimmer of hope for American business. A New York Federal Court has claimed jurisdiction over a lawsuit seeking to hold a state sponsor of terrorism civilly responsible for its wrongful acts. In Sokolow v. PLO, the Palestinian Liberation Organization is being sued in the amount of 3 billion dollars for the wrongful death of numerous Israeli and United States citizens that were killed or injured as a result of PLO terrorist activities during the Second Intifada. The Anti-terrorism Act of 1991 made this lawsuit possible and imposes civil liability on state sponsors of terrorism.
Although this case has not come to a final judgment, this case could be ushering in a new era. One that holds foreign states responsible for the damages suffered by individuals, or companies, as a result of a state’s wrongful act. American businesses can only hope for a similar bill that would impose civil liability on countries responsible for economic espionage. Until that day, American businesses remain vulnerable.
To end with another Dr. Strangelove reference; Colonel “Bat” Guano, in responding to an order to shoot the lock off the Coca Cola machine to retrieve some change to call the President, reflects that “Okay. I’m gonna get your money for ya. But if you don’t get the President of the United States on that phone, . . . you’re gonna have to answer to the Coca-Cola company.”
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