Legal Definitions - Industrial Espionage Act

The term Industrial Espionage Act is commonly used to refer to the Economic Espionage Act of 1996, a federal law in the United States. This act makes it a federal crime to steal or misappropriate trade secrets. It aims to protect American businesses and national security from the theft of valuable proprietary information, whether committed by domestic competitors or foreign entities.

Under the Economic Espionage Act, a "trade secret" is defined broadly to include virtually any type of information—such as formulas, patterns, compilations, programs, devices, methods, techniques, or processes—that derives independent economic value from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, and is subject to reasonable efforts to maintain its secrecy. The act criminalizes the theft of such secrets with the intent to either injure the owner of the trade secret or to benefit anyone other than the owner, particularly when the theft is intended to benefit a foreign government, instrumentality, or agent.

• Example 1: Theft of Proprietary Manufacturing Processes

  A senior engineer at a leading electric vehicle battery manufacturer, before leaving to join a rival startup, downloads the detailed chemical composition and manufacturing process for their employer's next-generation battery. This battery technology is still under development and represents years of research and a significant competitive advantage. The engineer intends to use this confidential information to help the new startup accelerate its own battery development, directly undermining his former employer's market position.

  This illustrates the Economic Espionage Act because the engineer stole a trade secret (the battery formula and manufacturing process) with the intent to benefit a competitor and injure his former employer, who had taken reasonable steps to keep the information secret.

• Example 2: Foreign Government-Sponsored Espionage

  An employee working for a U.S. aerospace company that develops advanced radar systems is approached by an agent of a foreign government. The agent offers the employee a substantial sum of money in exchange for the blueprints and technical specifications of a cutting-edge radar system that provides a significant military advantage. The employee provides the requested documents to the foreign agent.

  This scenario falls under the Economic Espionage Act because the employee stole trade secrets (the radar system blueprints and specifications) with the explicit intent to benefit a foreign government, which is a particularly serious offense under the act.

• Example 3: Misappropriation of Strategic Business Plans

  A marketing director at a major online streaming service compiles a comprehensive report detailing the company's proprietary algorithm for content recommendation and its confidential strategic plan for market expansion into new international regions. Before resigning, she emails this entire report, which is marked "Confidential," to her personal email account. Her intention is to use this information to advise a competing streaming service on how to counter her former employer's upcoming market moves and gain a competitive edge.

  This demonstrates the Economic Espionage Act because the marketing director misappropriated valuable trade secrets (the algorithm and strategic plan) that derive economic value from their secrecy, with the intent to benefit a competitor and potentially harm her former employer.