10 February 2006

Economic Espionage: Chasing 0's and 1's...

What do corporate executives worry about these days? The same thing Chief Security Officers and General Counsels have nightmares about. They all realize that globalization is truly upon us. Rapid transportation, open borders and the Internet have opened new doors for criminals and terrorists to move information quickly, deploy orders and even post stolen assets for sale in an underground world of ubiquitous trade.

Economic Espionage is the #2 issue at the FBI and for good reason. The recent indictment of Suibin Zhang illustrates just one example of a crime happening all too often and right under the corporate executives nose.

The United States Attorney for the Northern District of California announced that Suibin Zhang, 37, of San Jose, California, was charged late yesterday by a federal grand jury in San Jose in a nine-count indictment alleging computer fraud; theft and unauthorized downloading of trade secrets; and the unauthorized copying, transmission and possession of trade secrets.

The maximum penalties for each of the computer fraud counts is 5 years imprisonment, a $250,000 fine or twice the gross gain or loss and 3 years supervised release. The maximum penalties for each of the trade secret counts is 10 years imprisonment, a $250,000 fine or twice the gross gain or loss and 3 years supervised release.

An indictment simply contains allegations against an individual and, as with all defendants, Mr. Zhang must be presumed innocent unless and until convicted.

The people who work for your organization need to have a greater awareness of what the Economic Espionage Act of 1996 is all about. Whether the information that was presumed to be stolen is Mr. Zhang's property or the property of his employer will be at question here. Corporate Information Security Policy will have covered this yet the motivation and the lack of understanding of what constitutes intellectual capital or trade secrets is what needs the most clarification with employees.

VIII.B. The Economic Espionage Act of 1996, 18 U.S.C. �� 1831- 1839
VIII.B.1. Overview of the statute The Economic Espionage Act of 1996 ("EEA") contains two separate provisions that criminalize the theft or misappropriation of trade secrets. The first provision, codified at 18 U.S.C. � 1831(a), is directed towards foreign economic espionage and requires that the theft of the trade secret be done to benefit a foreign government, instrumentality, or agent. It states: (a) In general. -- Whoever, intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent, knowingly - (1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret; (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret; (3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; (4) attempts to commit any offense described in any of paragraphs (1) through (3); or (5) conspires with one or more other persons to commit any offense described in any of paragraphs (1) through (3), and one or more of such person do any act to effect the object of the conspiracy, shall, except as provided in subsection (b), be fined not more than $500,000 or imprisoned not more than 15 years, or both.

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