Industrial espionage occurs when an individual or a party gains access to a company’s information in a manner that is:
The term espionage is another word that may be used for the action of spying. Industrial espionage includes an unlawful observation of company activities, unlawful listening, for example, using a wiretap, and unlawful access to company information.
All of these constitute spying on a company. Industrial espionage may also be referred to as economic espionage or corporate espionage so it can be distinguished from more traditional forms of national security espionage.
Crimes including identity theft, piracy, and computer fraud often involve some type of industrial espionage, where one country spies on another country. State and federal governments govern corporations through various laws, for example, the Economic Espionage Act of 1996.
What Are Some Examples of Industrial Espionage?
Industrial espionage may occur when an individual acts on their own behalf. One example of this is when a dissatisfied employee breaks into the company records of their own employer in order to cause damage to the company.
This type of espionage may also occur on behalf of a competitor company. One example of acting on behalf of another company is when one company hires an employee or an outside party to illegally investigate the business of their competitor.
Common examples of industrial espionage include:
- Breaking into company files or trespassing onto property without proper authorization;
- Posing as a worker in order to learn company trade secrets or other confidential information;
- Placing a wiretap on a competitor’s phone;
- Hacking into computers; and
- Sending malware or a virus to a competitor’s website.
Technology-based companies are particularly prone to industrial espionage issues, especially related to technology products or novel ideas. For example, automobile companies, biotechnology companies, and software firms are often targets of corporate espionage.
Transferring stolen trade secrets or stolen company property may also be considered espionage. Other issues that may be related to industrial espionage may include:
What Is the Penalty for Industrial Espionage Charge?
An industrial espionage violation may result in numerous different legal consequences. For example, civil remedies may be issued by civil courts.
Examples of civil remedies include a damages award for lost profits and an injunction requiring the defendant to return the stolen information or property.
Another example is a cease and desist order, which may be issued if the defendant has been using copyrighted materials or stolen trade secrets for profit. In addition to these civil consequences, there may also be a criminal aspect to an industrial espionage case.
This applies especially in cases involving criminal activity, such as breaking and entering or trespassing. In addition, espionage may involve a number of different white collar crimes, for example, altering company records or conducting insider trading.
An individual who is charged with corporate espionage may face criminal consequences, such as a jail or prison sentence in addition to criminal fines. A defendant’s liability may also depend on whether they were acting based on their own personal initiative or if they were acting under direct instructions from company authorities.
What Are White Collar Crimes?
A white-collar crime is a non-violent crime that is typically committed in a business or commercial situation for financial gain. The majority of these types of crimes are prosecuted by the federal government and are considered very serious.
The phrase white collar refers to an individual who commits these crimes. These individuals are typically high-powered professionals instead of blue collar laborers.
How Do Businesses Protect Their Trade Secrets?
A company can legally protect their trade secrets by adding specific provisions to their employment contracts. A non-disclosure agreement (NDA) provides the most specific protections.
NDAs require that employees keep company information covered by the agreement secret. A company can also use a non-compete covenant to prevent an ex-employee from revealing trade secrets to a competitor.
A company can also design its procedures and policies for its employees using the trade secret and communications regarding the trade secret. A company can address these types of policies in orientations or training when the employee is hired.
A company should notify employees of its intent to preserve the confidentiality of the trade secret.
What Activities Are Punishable under the Economic Espionage Act of 1996?
The Economic Espionage Act of 1996 provides penalties for deliberate trade secret misappropriation. Under the EEA, an individual is guilty if they do any of the following:
- Steal, or without authorization, carry away, take, or, by fraud, obtain a trade secret;
- Without authorization, copy, download, upload, change, destroy, transmit, or convey a trade secret;
- Receive, purchase, or possess a trade secret, knowing that the trade secret has been stolen or acquired wrongfully; or
- Attempts to do any of the activities outlined above;
- An attempt
- to commit economic espionage is punishable under the same penalties.
The EEA is fairly severe with individuals and corporations who embezzle trade secrets to benefit foreign agents of foreign countries.
What Remedies Are Available under the Economic Espionage Act of 1996?
The Economic Espionage Act of 1996 provides the United States Attorney General the right to prosecute any individual or organization that steals trade secrets. The penalties provided under the EEA are fairly severe and include:
- An individual who is found guilty under the Economic Espionage Act can be fined up to $500,000 and face up to 10 years in jail;
- A corporation that is found guilty can be fined up to $5,000,000;
- If the trade secret theft benefits a foreign country or foreign agent, the fines for a corporation can increase up to $10,000,000, and jail time for both an individual and a corporation can increase to up to 15 years; and
- The individual or corporation will be required to give up all profits and property acquired through the theft of the trade secret.
What Defenses Are Available?
The Economic Espionage Act of 1996 does lend itself to some defenses, including:
- The individual not know that the information was supposed to be kept secret;
- The individual not steal the trade secret to benefit economically;
- If the individual uses trade secret information to enhance their reputation, they may not have disobeyed the EEA; and
- The information the individual took was not a trade secret;
- To be a trade secret under the EEA, the data must:
- have economic value to its owner;
- not commonly known to others; and
- be under reasonable security.
Do I Need a Lawyer for Help with Industrial Espionage Legal Issues?
Industrial espionage may be a very serious issue and may cause a business to suffer lost revenue as well as lost opportunities. An individual accused of industrial espionage may face serious legal consequences.
If you have been accused of industrial espionage, it is essential to consult with an intellectual property lawyer. Your lawyer can provide you with advice regarding your particular case and charges as well as explain your legal options.
If you believe industrial espionage is occurring at your business, your lawyer can help you file a legal claim in court and represent you if you have to make an appearance. It is important to have a lawyer protect the information your business does not want revealed to the public.
