Corporate Espionage Prosecutions Under Federal Law
What is Corporate Espionage?
Corporate espionage involves the unauthorized acquisition, theft, or misuse of trade secrets, confidential business information, or proprietary data from a company, often for competitive advantage. This includes:
Theft of trade secrets
Hacking or unauthorized computer access
Insider theft or bribery to obtain secrets
Wire fraud or mail fraud connected to espionage
Relevant Federal Laws
Economic Espionage Act (EEA) of 1996 – 18 U.S.C. §§ 1831–1839
Criminalizes theft or misappropriation of trade secrets, especially when benefiting foreign governments or entities.
Section 1831 covers economic espionage benefiting a foreign government.
Section 1832 addresses theft of trade secrets for commercial advantage.
Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030
Used when hacking or unauthorized computer access is involved.
Wire Fraud Statute, 18 U.S.C. § 1343
Applied when communications via wire (phone, internet) are used to commit fraud or theft.
Theft of Trade Secrets Civil Remedies — under the Defend Trade Secrets Act (DTSA), though primarily civil, often accompanies criminal prosecutions.
Elements Prosecutors Must Prove (Economic Espionage Act)
The defendant knowingly stole or converted a trade secret.
The trade secret was related to a product or service used in or intended for interstate or foreign commerce.
The theft was done without the owner’s authorization.
The intent was to benefit a foreign government or for commercial advantage.
Key Case Law Examples
1. United States v. Aleynikov (2nd Cir., 2012)
Facts: Aleynikov, a former Goldman Sachs programmer, copied proprietary source code before leaving to join a competitor.
Charges: Theft of trade secrets under the EEA and CFAA.
Outcome: Convicted in district court, but the 2nd Circuit overturned the EEA conviction, ruling that Goldman Sachs' source code was not a "product" or "good" in interstate commerce.
Significance: Clarified limits on what qualifies as protected trade secrets under the EEA.
2. United States v. Sinofsky (E.D. Virginia, 2016)
Facts: Sinofsky, a former employee, downloaded trade secret information from his employer before joining a competitor.
Charges: Economic espionage under 18 U.S.C. § 1832.
Outcome: Convicted and sentenced.
Significance: Demonstrated successful prosecution under the EEA for misappropriation of confidential business information for competitive advantage.
3. United States v. Kim (N.D. California, 2017)
Facts: Kim was charged with stealing trade secrets related to semiconductor technology for the benefit of a foreign company.
Charges: Economic espionage under 18 U.S.C. § 1831.
Outcome: Convicted; sentenced to prison.
Significance: Example of EEA being used for cases involving theft benefiting foreign entities.
4. United States v. Hung (S.D. New York, 2013)
Facts: Hung, an executive at a pharmaceutical company, was charged with stealing proprietary information and sharing it with a foreign competitor.
Charges: Economic espionage and wire fraud.
Outcome: Pleaded guilty and received prison sentence.
Significance: Highlights overlapping charges (wire fraud and EEA) in corporate espionage cases.
5. United States v. Levashov (E.D. Pennsylvania, 2017)
Facts: Levashov, a hacker, illegally accessed computer networks of multiple companies to steal proprietary information.
Charges: CFAA violations, conspiracy, and wire fraud.
Outcome: Pleaded guilty, sentenced to 13 years.
Significance: Demonstrates prosecution of espionage involving cyber intrusions under CFAA alongside trade secret theft.
6. United States v. Sun (N.D. Texas, 2020)
Facts: Sun, an engineer, downloaded sensitive trade secrets about manufacturing processes before joining a foreign competitor.
Charges: Economic espionage, theft of trade secrets.
Outcome: Convicted and sentenced.
Significance: Reinforced federal commitment to prosecuting insider theft of corporate secrets.
7. United States v. Lu (N.D. California, 2019)
Facts: Lu was charged with attempting to sell stolen trade secrets from an American tech company to a foreign government.
Charges: Economic espionage under 18 U.S.C. § 1831.
Outcome: Convicted and sentenced.
Significance: Illustrates the law’s application to attempts and conspiracies to commit espionage.
Summary of Legal Principles
| Case | Year | Charges | Outcome | Significance |
|---|---|---|---|---|
| Aleynikov | 2012 | EEA, CFAA | EEA conviction overturned | Limits of “trade secret” under EEA |
| Sinofsky | 2016 | EEA | Convicted | Misappropriation for commercial advantage |
| Kim | 2017 | Economic espionage (foreign benefit) | Convicted | Theft benefiting foreign entities |
| Hung | 2013 | EEA, wire fraud | Guilty plea | Multiple charges in corporate espionage |
| Levashov | 2017 | CFAA, wire fraud | Guilty plea | Cyber espionage and hacking prosecuted |
| Sun | 2020 | EEA | Convicted | Insider theft of manufacturing secrets |
| Lu | 2019 | EEA (attempt, conspiracy) | Convicted | Attempts and conspiracies prosecuted |
Legal Takeaways
The Economic Espionage Act is the primary federal statute to prosecute corporate espionage involving trade secrets.
CFAA is often used when hacking or unauthorized computer access is involved.
Wire fraud and other charges frequently supplement espionage prosecutions.
Courts carefully analyze the scope of what constitutes a trade secret and whether it relates to interstate commerce.
Penalties are severe, including long prison sentences and heavy fines.
Cases can involve foreign government beneficiaries or purely commercial competitors.
Plea agreements are common but convictions on trial are frequent in serious cases.
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