Theft of Trade Secrets Clarification 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 (S. 3642) to clarify the scope of the Economic Espionage Act of 1996.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous materials on S. 3642, currently under consideration.

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

Mr. Speaker, S. 3642, the Theft of Trade Secrets Clarification Act of 2012, clarifies the scope of the Economic Espionage Act, EEA, and protects American jobs and businesses from the theft of their valuable trade secrets. I want to thank Senator Leahy for his hard work on this piece of legislation.

Since 1996, the EEA has served as the primary tool the Federal Government uses to protect secret, valuable, commercial information from theft. The Second Circuit's Aleynikov decision revealed a dangerous loophole that demands our attention. In response, the Senate unanimously passed S. 3642 in November. We need to act today to send this important measure directly to the President. We must also take action in response to the Second Circuit's call and ensure that we have appropriately adapted the scope of the EEA to the digital age.

I again thank Senator Leahy for his leadership on this issue. I urge my colleagues to support the bill, and I reserve the balance of my time.

Mr. Speaker, S. 3642, the ``Theft of Trade Secrets Clarification Act of 2012,'' clarifies the scope of the Economic Espionage Act (EEA) and protects American jobs and businesses from the theft of their valuable trade secrets. I thank Senator Leahy for his hard work on this bill.

Sergey Aleynikov was convicted for stealing and transferring valuable proprietary computer source code that belonged to his former employer, Goldman Sachs. Earlier this year, he was released from a federal penitentiary after serving only one year of an eight-year sentence.

According to the Second Circuit Court of Appeals, he had accepted an offer in 2009, to become a senior executive at a Chicago-based startup that intended to compete against Goldman in the provision of high frequency trading (HFT) services.

The Appeals Court explained:

just before his going-away party, Aleynikov encrypted and

uploaded to a server in Germany more than 500,000 lines of

source code for Goldman's HFT system . . . On June 2, 2009,

Aleynikov flew . . . to Chicago to attend meetings at Teza.

He brought with him a flash drive and a laptop containing

portions of the Goldman source code. When Aleynikov flew back

the following day, he was arrested by the FBI . . .''

Aleynikov was convicted of violating the EEA and the National Stolen Property Act. After reviewing the trial record, the Appeals Court issued an order in February 2012, which reversed Aleynikov'convictions on both counts.

The court's decision construed the scope of the two federal criminal statutes. It observed that there is a limitation that products be ``produced for'' or ``placed in'' interstate or foreign commerce.

The court concluded, ``Goldman's HFT system was neither `produced for' nor `placed in' interstate or foreign commerce,'' despite evidence that it facilitated millions of proprietary trades and transactions each year. It then determined that the theft of source code was not an offense under the EEA.

The court explained that when a statute, particularly a criminal statute, is ambiguous, it is appropriate to construe it narrowly and, ``to require that Congress should have spoken in language that is clear and definite'' before choosing a stricter interpretation.

In his concurring opinion, Judge Calabresi [Cal-abress-E] directly called upon Congress to clarify the scope of the EEA as he wrote:

[I]t is hard for me to conclude that Congress, in [the

EEA], actually meant to exempt the kind of behavior in which

Aleynikov engaged . . . [n]evertheless, while concurring [in

the opinion], I wish to express the hope that Congress will

return to the issue and state, in appropriate language, what

I believe it meant to make criminal in the EEA.

The FBI estimated earlier this year that U.S. companies had lost $13 billion to trade secret theft in just over six months. Over the past six years, losses to individual U.S. companies have ranged from $20 million to as much as $1 billion.

Since 1996, the EEA has served as the primary tool the federal government uses to protect secret, valuable, commercial information from theft.

The Second Circuit's Aleynikov [Alay-na-kov] decision revealed a dangerous loophole that demands our attention. In response, the Senate unanimously passed S. 3642 in November.

We need to act today to send this important measure directly to the President. We must also take action in response to the Second Circuit's call and to ensure that we have appropriately adapted the scope of the EEA to the digital age.

I again thank Senator Leahy for his leadership on this issue and I urge my colleagues to support the bill.

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

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

Mr. Speaker, S. 3642, the Theft of Trade Secrets Clarification Act, will help ensure that American businesses can effectively protect their trade secrets. This legislation passed the Senate by unanimous consent last month, and we are proud to be passing it today.

S. 3642 responds to a recent Federal court decision that exposed a gap in Federal law. In April of this year, the Second Circuit Court of Appeals held that the Federal statute prohibiting the theft of trade secrets does not apply to computer source code in some circumstances.

In the Aleynikov case, the defendant, a computer programmer who worked for Goldman Sachs, electronically copied and remotely stored thousands of lines of source code from the company's internal, high- frequency trading system and then downloaded that code to his new employer's server after leaving Goldman Sachs.

The transfer of the source code would potentially save up to $10 million and 2 years of programmers' time for the new employer and would eliminate some of the competitive advantage Goldman Sachs achieved by developing their own trading program.

Federal law prohibits the conversion of any trade secret that is related to or included in a product that is produced or placed in interstate or foreign commerce. Because the code that was stolen is a component of an internal computer system, the court found that it is not covered by the statute because it was not produced for, or placed in, a product in interstate or foreign commerce.

This bill will close the gap exposed in that case by clarifying that the statute applies to both products and services which are used in or intended for use in interstate or foreign commerce.

Congress needs to act quickly to enhance the ability of American businesses to safeguard the proprietary information they develop to gain a competitive advantage. This is particularly important as our country's economy is increasingly knowledge- and service-based.

We must ensure that our statutes designed to prohibit the theft of trade secrets appropriately cover the range of intellectual property generated and used by our businesses.

This bill is an important step to accomplish this goal, and I commend the senior Senator from Vermont, the chair of the Judiciary Committee in the Senate, Mr. Leahy, for his leadership on the bill; and I urge my colleagues to support this legislation so it can be sent directly to the President's desk to be signed into law.

I yield back the balance of my time.

Mr. Speaker, S. 3642, the ``Theft of Trade Secrets Clarification Act, will help ensure that American businesses can effectively protect their trade secrets. This legislation passed the Senate by unanimous consent last month and I am proud to support it today.

S. 3642 responds to a recent federal court decision that exposed a gap in federal law.

In April of this year, the SeCond Circuit Court of Appeals held that the federal statute prohibiting the theft of trade secrets does not apply to computer source code in some circumstances.

In the Aleynikov case, the defendant, a computer programmer who worked for Goldman Sachs, electronically copied and remotely stored thousands of lines of source code for the company's internal, high- frequency trading system and then downloaded that code to his new employer's server after leaving Goldman Sachs.

The transfer of the source code would potentially save $10 million and two years of programmers' time for the new employer and would eliminate some of the competitive advantage Goldman achieved by developing their own trading program.

Federal law prohibits the conversion of any trade secret that is related to or included in a product that is produced or placed in interstate or foreign commerce. Because the code that Mr. Aleynikov stole is a component of an internal computer system, the court found that it is not covered by the statute because it is not produced for, or placed in, a product in interstate or foreign commerce.

S. 3642 would close the gap exposed in the Aleynikov case by clarifying that the statute applies to both products and services which are used in or intended for use in interstate or foreign commerce.

Congress needs to act quickly to enhance the ability of American businesses to safeguard the proprietary information they develop to gain competitive advantage. This is particularly important as our country's economy is increasingly knowledge and service-based.

We must ensure that our statutes designed to prohibit the theft of trade secrets appropriately cover the range of intellectual property generated and used by our businesses.

This bill is an important step to accomplish this goal, and I commend the gentleman from Vermont, Senator Leahy. I urge my colleagues to support this legislation today so that it can be sent to the President's desk to be signed into law.

Mr. Speaker, on that I demand the yeas and nays.

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, due to a family matter requiring my presence in New Mexico, I was not able to be present for a number of votes on the House floor this week.

Had I been present for rollcall vote No. 627, on motion to suspend the rules and pass H.R. 4606, to authorize the issuance of right-of-way permits for natural gas pipelines in Glacier National Park, and for other purposes, as amended, I would have voted ``aye.''

Had I been present for rollcall vote No. 628, on motion to suspend the rules and pass S. 3193, the Barona Band of Mission Indians Land Transfer Clarification Act of 2012, I would have voted ``aye.''

Had I been present for rollcall vote No. 629, on motion to suspend the rules and pass H.R. 6504, the Small Business Investment Company Modernization Act of 2012, I would have voted ``aye.''

Had I been present for rollcall vote No. 630, on motion to suspend the rules and agree to the Senate Amendment on H.R. 3783, an act to provide for a comprehensive strategy to counter Iran's growing hostile presence and activity in the Western Hemisphere, and for other purposes, I would have voted ``aye.''

Had I been present for rollcall vote No. 631, on motion to suspend the rules and pass H.R. 6621, to correct and improve certain provisions of the Leahy-Smith America Invents Act and title 35, United States Code, as amended, I would have voted ``aye.''

Had I been present for rollcall vote No. 632, on motion to suspend the rules and pass S. 3642, the Theft of Trade Secrets Clarification Act, I would have voted ``aye.''

Had I been present for rollcall vote No. 633, on motion to suspend the rules and pass H.R. 6672, to reauthorize certain programs under the Public Health Service Act and the Federal Food, Drug, and Cosmetic Act with respect to public health security and all-hazards preparedness and response and for other purposes, I would have voted ``aye.''

Had I been present for rollcall vote No. 634, on motion to suspend the rules and pass H.R. 1845, the Medicare IVIG Access Act, I would have voted ``aye.''

Had I been present for rollcall vote No. 635, on motion to suspend the rules and agree to H. Res. 668, to refer H.R. 5862, a bill making congressional reference to the United States Court of Federal Claims pursuant to sections 1492 and 2509 of title 28, United States Code, the Indian trust-related claims of the Quapaw Tribe of Oklahoma as well as its individual members, as amended, I would have voted ``aye.''

Had I been present for rollcall vote No. 636, on the motion to suspend the rules and pass H.R. 6655, the Protect Our Kids Act, I would have voted ``aye.''

Had I been present for rollcall vote No. 637, on the motion to suspend the rules and pass S. 3564, the Public Interest Declassification Board Reauthorization Act, I would have voted ``aye.''

Had I been present for rollcall vote No. 638, on the motion to suspend the rules and pass H.R. 6016, the Government Employee Accountability Act, as amended, I would have voted ``aye.''