Harris Introduces Legislation to Strengthen Nation’s Ability to Combat Economic Espionage

WASHINGTON, D.C. Dec. 12, 2018Today, U.S. Senator Kamala D. Harris (D-CA), a member of the Senate Judiciary Committee, introduced the Deterring Espionage by Foreign Entities through National Defense (DEFEND) Act, which would update the Economic Espionage Act (EEA) to better address the growing threat of economic and industrial espionage perpetrated by foreign actors. The legislation increases the damages available for victims of trade theft, extends the statute of limitations, and expands the scope of the EEA to encompass a broader range of offenses occurring outside of the United States, including cybercrime and hacking.

“As foreign agents develop increasingly sophisticated methods of stealing American intellectual property and trade secrets, we must strengthen the tools Americans can use to respond to this growing threat and take steps to secure our economy,” said Harris. “It is absolutely vital that our approach to combatting economic espionage is grounded in a modern-day understanding of the tactics employed by foreign actors and that our laws provide a strong deterrent to committing these acts in the first place.”

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At a hearing of the Senate Judiciary Committee today regarding China’s espionage efforts, Senator Harris expressed her concern about the potential harm to the United States economy and the threat to national security. Harris also questioned Assistant Attorney General John Demers about whether specific provisions of the DEFEND Act would be helpful in deterring trade theft and penalizing offenders.

Demers acknowledged that expanding the extraterritorial scope of the EEA and increasing damages available to victims could be helpful tools in combatting economic espionage and stated that he looked forward to the Department of Justice weighing in on the full bill.

The DEFEND Act would:

  • Increase available punitive damages available to victims under the EEA from two times the amount of damages awarded to three times the amount of damages awarded. This increase in available damages improves the deterrent effect of the EEA while ensuring that victims of trade theft are properly compensated for their injuries.
  • Extend the statute of limitations for civil actions from 3 to 5 years after the “misappropriation” was discovered or should have been discovered.
  • Expand the extraterritorial scope of the EEA to include offenses occurring abroad that have “substantial economic effect” in the United States, ensuring that victims can still be made whole if an offense causes significant economic harm but does not occur on United States soil.

“The move to expand extraterritorial scope is a critical step to align the law with how foreign threat actors target U.S. organizations. We have observed adversary groups stealing sensitive business information from a foreign partners, subsidiaries, suppliers, and customers of many U.S. companies. From a victim organization’s perspective, the threat to their business is still the same as if those threats occurred in the territorial United States, but under current law, they are not provided appropriate protection. This bill would help ensure legal mechanisms are available worldwide for U.S. companies targeted by state-backed groups who might otherwise operate without risk or repercussion.” – Christopher Porter, Chief Intelligence Strategist, FireEye, Inc.

“The DEFEND Act would represent a vital step towards ensuring that American companies doing business abroad, or whose trade secrets are misappropriated abroad, will have better options in U.S. courts to redress misappropriation committed on foreign soil. Expanding the extraterritorial scope of the law would provide U.S. businesses with necessary legal mechanisms to counter the threat of trade secret theft, and I applaud Senator Harris for her leadership on this issue.” – Professor Elizabeth Rowe, University of Florida Levin College of Law

“The theft of trade secrets remains an ongoing threat to U.S. economic security and competitiveness.  I applaud Senator Harris’ efforts on the EEA/DTSA to increase the punitive damages that can be assessed against trade secret thieves for their reprehensible conduct as well as her efforts to lengthen the statute of limitations since acts of trade secret theft are initially hidden from their victims.  Additionally, by broadening the applicability to conduct outside the U.S., Senator Harris’ proposal focuses on an important aspect of extraterritorial trade secret theft, that is, the substantial economic effect that can be felt in the U.S. by actions that occur exclusively outside the U.S. – Michelle Evans, J.D., Associate Professor of Political Science, Texas State University

Text of the DEFEND Act can be found here.