Foreign and Economic Espionage Penalty Enhancement Act of 2012

Mr. Speaker, I move to suspend the rules and concur in the Senate amendment to the bill (H.R. 6029) to amend title 18, United States Code, to provide for increased penalties for foreign and economic espionage, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous materials on the matter currently under consideration.

Mr. Speaker, I yield myself as much time as I may consume.

First of all, I want to thank Judiciary Committee Chairman-elect Bob Goodlatte, Ranking Member John Conyers, and IP Subcommittee Ranking Member Mel Watt for their work on this bill.

Mr. Speaker, the Foreign and Economic Espionage Penalty Enhancement Act of 2012 deters and pushes criminals who target U.S. economic and security interests on behalf of foreign interests.

In a dynamic and globally connected information economy, the protection of intangible assets is vital, not only to the success of individual enterprises, but also to the future of entire industries.

In recent years, cybercriminals have shifted from the theft of personal information such as credit cards and Social Security numbers to the theft of corporate intellectual capital.

Our intelligence community has warned us that foreign interests place a high priority on acquiring sensitive U.S. economic information and technologies. In the U.S., the Economic Espionage Act serves as a primary tool the Federal Government uses to protect secret, valuable commercial information from theft.

Our intelligence community declares that there is a ``significant and growing threat to our Nation's prosperity and security'' posed by criminals both inside and outside our borders who commit espionage. Congress should also recognize and confront this increasing threat by adjusting our penalties so that we can enhance deterrents and provide appropriate punishments for those criminals who knowingly target our companies for espionage.

I urge my colleagues to support H.R. 6029 as it was amended by the Senate. The original bill was developed in a bipartisan manner and was unanimously reported by both the Judiciary Committee and this House. This is a commonsense and much-needed measure that deserves our full support.

Mr. Speaker, I reserve the balance of my time.

I want to thank Judiciary Committee Chairman-Elect Bob Goodlatte, Ranking Member John Conyers and IP Subcommittee Ranking Member Mel Watt for their work on this bill. It has been a privilege to serve with them during my tenure as Chairman and Ranking Member of the Judiciary Committee.

I look forward to continuing to explore areas where we can work together in the 113th Congress.

Mr. Speaker, the Foreign and Economic Espionage Penalty Enhancement Act of 2012 deters and punishes criminals who target U.S. economic and security interests on behalf of foreign interests.

In a dynamic and globally-connected information economy, the protection of intangible assets is vital not only to the success of individual enterprises but also to the future of entire industries.

A global study released last year by McAfee, the world's largest security technology company, and Science Applications International Corporation, concluded that corporate trade secrets and other sensitive intellectual capital are the newest ``currency'' of cybercriminals.

In recent years, cybercriminals have shifted from the theft of personal information such as credit cards and social security numbers to the theft of corporate intellectual capital.

Our intelligence community has warned us that foreign interests place a high priority on acquiring sensitive U.S. economic information and technologies.

We know that some individuals intentionally and persistently seek out U.S. information and trade secrets. The most recent report from the Office of the National Counterintelligence Executive specifically cited Chinese as ``the world's most active and persistent perpetrators of economic espionage.''

The report also described Russia's intelligence services as responsible for ``conducting a range of activities to collect economic information and technology from US targets.''

In the U.S., the Economic Espionage Act (EEA) serves as the primary tool the federal government uses to protect secret, valuable commercial information from theft.

On December 18, the House passed S. 3642, an important bill that clarifies the scope of protectable trade secrets.

Since enacting the EEA in 1996, Congress has not adjusted its penalties to take into account the increasing importance of intellectual property to the economic and national security of the U.S.

H.R. 6029, which the House unanimously passed this summer, increases the maximum penalties for an individual convicted of committing espionage on behalf of a foreign entity.

The bill the House passed increases the maximum penalty from 15 to 20 years imprisonment and increases the maximum fine from $500,000 to $5 million.

Several Senators wanted to give further consideration to the proposed statutory maximum increase from 15 to 20 years imprisonment.

The Senate amended H.R. 6029 by deleting this single provision. They then passed it unanimously on December 19, so that we may act again and send this bill directly to the desk of the President.

I thank Senators Lee and Paul along with Senators Leahy, Kohl and Grassley for helping to resolve concerns and advancing this measure.

Our Intelligence community declares that there is a ``significant and growing threat to [our] nation's prosperity and security'' posed by criminals--both inside and outside our borders--who commit espionage.

Congress should also recognize and confront this increasing threat by adjusting our penalties so that we may enhance deterrence and provide appropriate punishments for those criminals who knowingly target our companies for espionage.

I urge my colleagues to support H.R. 6029 as it was amended by the Senate. The original bill was developed in a bipartisan manner and was unanimously reported by both the Judiciary Committee and this House. This is a common sense and much-needed measure that deserves our full support.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6029) to amend title 18, United States Code, to provide for increased penalties for foreign and economic espionage, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous materials on H.R. 6029 currently under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I thank Ranking Member John Conyers, IP Subcommittee Chairman Bob Goodlatte, IP Subcommittee Ranking Member Mel Watt, and the other Members of the House from both sides of the aisle who joined as original cosponsors of this commonsense bill.

The Foreign and Economic Espionage Penalty Enhancement Act of 2012 focuses on one goal: to deter and punish criminals who target U.S. economic and security interests on behalf of foreign interests.

In 1975, tangible assets, such as real estate and equipment, made up 83 percent of the market value of S&P 500 companies. Intangible assets, which include trade secrets, proprietary data, source code, business processes, and marketing plans, constituted only 17 percent of these companies' market value.

By 2009, these percentages had nearly reversed. Tangible assets accounted for only 19 percent of S&P 500 companies' market value while their intangible assets had soared to 81 percent. In a dynamic and globally connected information economy, the protection of intangible assets is vital not only to the success of individual enterprises but also to the future of entire industries.

A global study released last year by McAfee, the world's largest security technology company, and Science Applications International Corporation concluded that corporate trade secrets and other sensitive intellectual capital are the newest ``currency'' of cybercriminals. The study found the motivation for such crimes in the cyber underground is almost always financial. In recent years, cybercriminals have shifted from targeting the theft of personal information, such as credit cards and Social Security numbers, to the theft of corporate intellectual capital. Corporate intellectual capital is vulnerable, of great value to competitors and foreign governments, and its theft is not always discovered by victims.

Our intelligence community warns that foreign interests place a high priority on acquiring sensitive U.S. economic information and technologies. Targets include information and communications technologies, business information, military technologies, and rapidly growing civilian and dual-use technologies, such as those that relate to clean energy, health care, and pharmaceuticals.

We know that certain actors intentionally seek out U.S. information and trade secrets. The most recent report from the Office of the National Counterintelligence Executive identified Chinese actors as ``the world's most active and persistent perpetrators of economic espionage.'' The report also described Russia's intelligence services as responsible for ``conducting a range of activities to collect economic information and technology from U.S. targets.'' Of seven Economic Espionage Act cases resolved in fiscal year 2010, six involved links to China. Five companies were accused of the theft of trade secrets earlier this year. Four are Chinese state-owned enterprises or subsidiaries.

In the U.S., the EEA serves as the primary tool the Federal Government

uses to protect secret, valuable commercial information from theft. The EEA addresses two types of trade secret theft. Section 1831 punishes the theft of a trade secret to benefit a foreign entity. Section 1832 punishes the commercial theft of trade secrets carried out for economic advantage whether or not the theft benefits a foreign entity.

Since enacting the EEA in 1996, Congress has not adjusted its penalties to take into account the increasing importance of intellectual property to the economic and national security of the U.S. The bill increases the maximum penalties for an individual convicted of committing espionage on behalf of a foreign entity. Currently, the maximum penalty for someone convicted under section 1831 of the EEA is 15 years imprisonment and a fine of up to $500,000. This bill increases the maximum penalty to 20 years imprisonment and a fine of up to $5 million. Earlier this year, the FBI estimated that U.S. companies had lost $13 billion to trade secret theft in just over 6 months. Over the past 6 years, losses to individual U.S. companies have ranged from $20 million to as much as $1 billion.

Our intelligence community has recognized a ``significant and growing threat to our Nation's prosperity and security'' posed by criminals, both inside and outside our borders, who commit espionage. Congress should also recognize this increasing threat and enhance deterrence and more aggressively punish those criminals who knowingly target U.S. companies for espionage.

So I urge my colleagues to support H.R. 6029, which was unanimously reported by the Judiciary Committee this month.

I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume

Mr. Speaker, I rise in support of the Senate amendment to H.R. 6029, the Foreign and Economic Espionage Penalty Enhancement Act of 2012. The House passed this legislation by voice vote in August, and the Senate recently passed a bill with amendment by unanimous consent.

Mr. Speaker, H.R. 6029 will increase the maximum fines that may be imposed for engaging in the Federal offense of economic espionage. The crime of economic espionage consists of knowingly misappropriating trade secrets with the intent or knowledge that the offense will benefit a foreign government.

As reported by the U.S. intellectual property enforcement coordinator, economic espionage is a serious threat to American businesses by foreign governments.

Economic espionage represents a significant cost to victim companies and threatens the economic security of the United States. This crime inflicts costs on companies, such as the loss of unique intellectual property, the loss of expenditures related to research and development, and the loss of future revenues and profits. Many companies are unaware when their sensitive data is pilfered, and those that find out are often reluctant to report the losses, fearing potential damage to their reputations with investors, customers, and employees.

The pace of the foreign collection of economic information and industrial espionage activities against major United States corporations is accelerating. For example, in fiscal year 2011, the Justice Department and the FBI saw an increase of 29 percent in economic espionage and trade secret theft investigations compared to those in fiscal year 2010.

Details related to recent Federal investigations and prosecutions suggest that economic espionage and trade secret theft on behalf of companies located in China is an emerging trend. For example, at least 34 companies were reportedly victimized by a set of attacks originating in China in 2010. In the attacks, computer viruses were spread via emails to corporate employees, allowing the attackers to have access to emails and sensitive documents.

Foreign hackers constantly target U.S. companies in such ways in order to get every piece of competitive intelligence information they can. We simply cannot allow this to continue to happen. In response to this growing threat, in her 2011 annual report, the U.S. Intellectual Property Coordinator called upon Congress to increase the penalties for economic espionage, and this bill is consistent with that recommendation.

I would like to commend Members on both sides of the aisle for their work on this bill, particularly the gentleman from Texas, the chair of the committee, Mr. Smith; the ranking member, the gentleman from Michigan (Mr. Conyers); the incoming chair of the Judiciary Committee, my colleague from Virginia (Mr. Goodlatte); and the gentleman from North Carolina (Mr. Watt), who all worked very diligently on this bill. I also want to recognize the leadership of Senator Leahy.

I urge my colleagues to support the Senate amendment to H.R. 6029, and I yield back the balance of my time.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, I yield myself such time as I may consume.

I rise in support of H.R. 6029, the Foreign and Economic Espionage Penalty Enhancement Act of 2012.

This legislation will help to protect the intellectual property and competitive strengths of American businesses by increasing the maximum penalties for engaging in the Federal offense of economic espionage. This crime, which has serious repercussions for the victim companies and our economy, consists of knowingly misappropriating trade secrets with the intent or knowledge that the offense will benefit a foreign government.

As reported by the U.S. Intellectual Property Enforcement Coordinator, economic espionage is a serious threat to American businesses by foreign governments. Economic espionage inflicts a significant cost on victim companies and threatens the economic security of the United States. These companies incur extensive costs resulting from the loss of unique intellectual property, the loss of expenditures related to research and development, and the loss of future revenues and profits. Many companies do not even know when their sensitive data has been stolen, and those that do find out are often reluctant to report the losses, fearing potential damage to their reputations with investors, customers, and employees.

Unfortunately, the pace of the economic espionage collection of information and industrial espionage activities against major United States corporations is accelerating. During fiscal year 2011, the Department of Justice and the FBI saw an increase of 29 percent in economic espionage and trade secret theft investigations compared to the prior year. Foreign competitors of United States corporations with ties to companies owned by foreign governments are increasing their efforts to steal trade secret information and intellectual property by infiltrating our computer networks.

Evidence suggests that economic espionage and trade secret theft on behalf of companies located in China is an emerging trend. For example, at least 34 companies were reportedly victimized by attacks originating from China in 2010. Over the course of these attacks, computer viruses were spread via emails to corporate employees, allowing the attackers to have access to emails and sensitive documents. In response to these growing threats, the United States Intellectual Property Coordinator, in her 2011 annual report, called upon Congress to increase the penalties for economic espionage, and this bill is consistent with that recommendation.

I want to commend Members on both sides of the aisle for their work on this bill, particularly the gentleman from Texas, the Judiciary Committee chairman, Mr. Smith; the gentleman from Michigan, the ranking member of the committee, Mr. Conyers; my colleague from Virginia (Mr. Goodlatte); and the gentleman from North Carolina (Mr. Watt).

I urge my colleagues to support the bill, and I yield back the balance of my time.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

I ask unanimous consent that the Senate proceed to the consideration of Calendar No. 493, H.R. 6029.

I ask unanimous consent that a Kohl-Lee substitute amendment which is at the desk be agreed to; the bill, as amended, be read a third time and passed; the motions to reconsider be laid upon the table with no intervening action or debate; and that any statements related to the bill be printed in the Record.