Magaly Taylor, Contributing Member 2023-2024
Intellectual Property and Computer Law Journal
I. Introduction
In California, Liming Li, a senior software engineer, was arrested on criminal charges for his alleged theft of trade secrecy concerning sensitive technology on May 6, 2022.[1] Li stole thousands of files and sensitive technology that could be used to manufacture nuclear submarines and military aircraft, which can threaten national security from his employer.[2] Also in California, Weibao Wang, was charged with theft and attempted theft of trade secrets.[3] Wang allegedly stole thousands of documents containing the designs and codes of Apple’s autonomous vehicle technology after he accepted an offer to join a U.S.-based subsidiary of a company headquartered in a foreign nation.[4] Unfortunately, Li and Wang are not the only cases where trade secrets could impact national security if misappropriated by foreign adversaries. Due to an increased need to protect against the theft of trade secrets, the U.S. Government initiated the Disruptive Technology Strike Force.
Formed in February 2023, the U.S. Department of Justice and the U.S. Department of Commerce launched the Disruptive Technology Strike Force.[5] The Strike Force was created to prevent U.S. technology and intellectual property (IP) from being used by foreign adversaries to advance their regimes and other national security threats.[6]
This article will discuss the reasoning for the significant growth in trade secret charges, the legal challenges the government will face to overcome adversarial threats, and the need for better standards and regulations of trade secrets. Part II of this article will discuss the U.S. Government’s response to the theft of trade secrets through the Disruptive Technology Strike Force, the background of the Espionage Act, and the Theft of Trade Secrets under the Espionage Act. Part III of the article will examine the growing trends of federal prosecutors charging defendants with the theft of trade secrets due to the challenges of the Economic Espionage Act, the challenges associated with trade secret theft charges, and how the government should have a more significant focus on mitigating damages rather than having a reactive response to the growing issues from theft of trade secrets.
II. Background
The Disruptive Technology Strike Force
The Disruptive Technology Strike Force (“Strike Force”) was established in early 2023[7] and is co-led by the Departments of Justice and Commerce.[8] The Strike Force strengthens national security by investigating and prosecuting criminal cases to protect IP from foreign adversaries, theft, or sanctions invasions, primarily through cyber-attacks directed at sensitive information.[9] The group is composed of experts from different government organizations, including the FBI and other agencies focused on national security, and operates in twelve regions across the United States.[10]
During the first year of the Disruptive Technology Strike Force, fourteen individuals were charged with alleged offenses related to the unlawful transfer of sensitive information, goods, and military-grade technology to foreign adversaries under the Economic Espionage Act.[11] The cases focus on theft of trade secrets and export, theft of confidential information, and theft of U.S. technology.[12] During the first year, the Strike Force also issued temporary denial orders, which temporarily denies persons of export privileges, against twenty-nine entities and contributed to placing numerous parties on a Specially Designated Nationals and Blocked Persons List.[13]
Definition of a Trade Secret
Trade secrecy is one of the principal ways to protect inventions. 18 U.S.C. § 1839 defines “trade secret” as all forms and types of information, whether tangible or intangible, and whether or how stored, if the owner has taken reasonable measures to keep such information secret; and the information derives independent economic value, from not being generally known to, and not being readily ascertainable through proper means by the public.[14]Additionally, a trade secret must obtain independent economic value from not being generally known to the public.[15] An example of a trade secret is the Coca-Cola™ product. The Coca-Cola™ recipe has been keeping the formula for the famous drink a secret for over one-hundred years.[16] By maintaining the secret process, Coca Cola™ has held on to a trade secret. Trade secrets have become popular since the Defend Trade Secrets Act of 2016, which allowed companies the opportunity to protect their IP by creating a federal, private, and civil cause of action for trade secret misappropriation.[17]
Trade secrets do not include general knowledge, skills, or abilities. Further, the owner of the trade secret must take reasonable security measures.[18] The extent of the security measures taken by the owner must be reasonable under the circumstances, depending on the facts of the specific case, which can ultimately change the outcome of the case.[19]
The Economic Espionage Act
The Economic Espionage Act was enacted after Congress recognized the importance of protecting IP and trade secrets about the economic health and security of the United States.[20] The Economic Espionage Act contains two provisions that criminalize the theft of trade secrets.[21]
First, 18 U.S.C. § 1831 is directed toward foreign economic espionage.[22] It prohibits theft of trade secrets that benefit a foreign government, instrumentality, or agent.[23] Under this provision, the government is required to prove: (1) the defendant stole, took, or by fraud, or without authorization obtained a trade secret;[24] (2) the defendant, without authorization, made copies, duplicates, sketches, destroyed, delivered, sent, or conveyed a trade secret;[25] (3) the defendant received or possessed the trade secret knowing it had been stolen or appropriated, obtained, or converted without authorization;[26] and (4) the theft of the trade secret benefits any foreign government, instrumentality, or agent.[27] If convicted, a defendant may be fined or imprisoned for up to fifteen years or both.[28]
Similar to the first provision, 18 U.S.C. § 1832 prohibits the theft of trade secrets, and the government has to prove similar elements. This provision, as opposed to the first, allows prosecutors to charge a defendant with theft of trade secrets regardless of who benefited from the theft.[29] This allows prosecutors to charge defendants under the Espionage Act even when they cannot prove that the theft of the trade secret benefits a foreign government, instrumentality, or agent. Although this provision does not require a foreign government to benefit from the theft of the trade secret, it does require that the product was in interstate or foreign commerce, that the defendant intended to use the trade secret to an economic benefit to anyone other than the owner, and the defendant knew or intended that any owner of the trade secret would be injured.[30] Under this provision, a defendant may be fined or imprisoned for not more than ten years or both if convicted.[31]
III. Discussion
The Challenge of the Charges
The fourteen cases announced by the Strike Force have elements of economic espionage; however, a federal prosecutor may face challenges when charging a defendant with the first provision of economic espionage over theft of trade secrecy. For a prosecutor to successfully convict a defendant under the Economic Espionage Act, the prosecutor must prove that the stolen information or materials was intended to benefit a foreign government.[32]Prosecution may be challenging due to insufficient evidence, witnesses, or diplomatic concerns.[33]
In U.S v. Hanhuan Jim, Hanhuan Jim was charged with theft of trade secrets and economic espionage.[34] After a bench trial, Hanhuan Jim was convicted of theft of trade secrets but acquitted of economic espionage because it could not be proven beyond a reasonable doubt the defendant intended for a foreign government to benefit from the theft due to the challenges of obtaining that evidence.[35] As a result, many cases that start as economic espionage often end up prosecuted as theft of trade secrets due to the difficulty in proving the intended entity. Although this case was tried before the Strike Force, it shows that charging a defendant under the Economic Espionage Act has been a challenge and will continue to be a challenge.
Due to the increased focus on the theft of trade secrets through the Strike Force under the Espionage Act, it is important that new regulations are tailored to the problem. Stronger regulation of trade secrecy is the solution to ensure prosecutors can properly prosecute defendants for the crimes they committed, especially because technology continues to change. The government must adapt to emerging new technology and foreign threats.
Proactive v. Reactive
Trade secret litigation costs approximately 4,000,000 to prosecute per case and can be lengthy[36] – so prosecution may not enough. The best way to avoid involvement in a trade secret investigation is to protect the trade secrets by taking reasonable steps, such as restricting access, controlling physical and electronic access, identifying weaknesses and taking steps to manage them, conducting employee training, and making continuous improvements.[37] Prosecuting cases without being proactive to mitigate the problem adds a band-aid to a growing issue and places a strain on the federal courts.
The FBI and other homeland security agencies have previously launched nationwide campaigns to raise awareness of trade secrets and how to mitigate them.[38] During the one-year release summit earlier this month, a Strike Force representative claimed the organization had fostered multiple partnerships with the private sector and worked directly with companies involved with sensitive export-controlled items and technology.[39] However, awareness campaigns are often insufficient when dealing with the emerging challenges of trade secret theft.
Industries in the U.S. have been shown to spend more on research and development than any other country in the world.[40] Economic espionage costs the American economy billions of dollars annually and puts our national security at risk.[41] Theft of trade secrets is a growing threat due to the evolving technological changes, and the government needs to focus on more preventative measures and work with the private sector on security standards.
IV. Conclusion
The Strike Force intends to protect U.S. national security by preventing sensitive technology from being used for inimical purposes.[42] The successful accomplishments of the Strike Force’s first year show they are utilizing resources from multiple groups and organizations to prevent – and hold accountable – nation-state adversaries from obtaining advanced technologies that could be used to enhance foreign adversary military capabilities, impact commercial use, or weaken the U.S. national security.[43]
Moving forward, companies and members of the Strike Force can expect a significant increase in criminal prosecution in cases involving trade secrecy theft. The Strike Force is meant to encourage trade secrecy and protection over U.S. technology. As a result, government agencies can expect improvement in information sharing between law enforcement agencies associated with the Strike Force, the intelligence community, and companies in the private sector that work with national security technology. Although the Strike Force has proven successful during its first year, threats are evolving, and the government must adapt to those changes by being more proactive instead of reacting and focusing on better-regulating trade secrets. There has been a united effort with the Strike Force, but the significant charge growth signifies more is needed.
[1] See, e.g., Justice Department Announces Five Cases as Part of Recently Launched Disruptive Technology Strike Force, Dep’t of Justice, (May 16, 2023), https://www.justice.gov/opa/pr/justice-department-announces-five-cases-part-recently-launched-disruptive-technology-strike.
[2] Id.
[3] Id.
[4] Id.
[5] Justice and Commerce Departments Announce Creation of Disruptive Technology Strike Force, Dep’t of Justice, (Feb. 16, 2023), https://www.justice.gov/opa/pr/justice-and-commerce-departments-announce-creation-disruptive-technology-strike-force.
[6] Id.
[7] Id.
[8] Id.
[9] See, e.g., Janes Pearson, U.S launches ‘disruptive technology strike force to target national security threats, Reuters, (Feb 16, 2023, 4:46 PM) https://www.reuters.com/world/us/us-launches-disruptive-technology-strike-force-target-national-security-threats-2023-02-16/.
[10] Dep’t of Justice, supra note 5.
[11] FACT SHEET: Disruptive Technology Strike Force Efforts in First Year to Prevent Sensitive Technology from Being Acquired by Authoritarian Regimes and Hostle Nation-States, Dep’t of Justice, (Feb. 16, 2024), https://www.justice.gov/opa/pr/fact-sheet-disruptive-technology-strike-force-efforts-first-year-prevent-sensitive.
[12] Id.
[13] Id.
[14] 18 U.S.C. § 1839.
[15] Id.
[16] Robert Yarbrough, Is Coca-Cola’s Trade Secret Recipe Still a Trade Secret?, Garson Law, (Feb. 28, 2011), https://garson-law.com/is-coca-colas-trade-secret-recipe-still-a-trade-secret/.
[17] Bret A. Cohen, Explaining the Defend Trade Secrets Act, American Bar Association, (Sep. 20, 2016), https://www.americanbar.org/groups/business_law/resources/business-law-today/2016-september/explaining-the-defend-trade-secrets-act/.
[18] See e.g., Pioneer Hi-Bred Int’l v. Holden Found Seeds, 35 F.3d 1226, 1235 (8th Cir. 1994).
[19] Id.
[20] 18 U.S.C. § 1831.
[21] Id.
[22] Id.
[23] Id.
[24] Id.
[25] Id.
[26] Id.
[27] Id.
[28] Id.
[29] 18 U.S.C. § 1832.
[30] Id.
[31] Id.
[32] See, e.g.,Badley Marcus, Disruptive Technology Strike Force: First Prosecutions Demonstrate Difficulties in Charging Individuals with Economic Espionage, Orrick, (22 June, 2023), https://www.orrick.com/en/Insights/2023/06/Disruptive-Technology-Strike-Force.
[33] Id.
[34] United States v. Hanjuan Jin, 833 F. Supp. 2d 977 (LCrR. 2012).
[35] Id.
[36] See, e.g.,Trade Secret Litigation 101, Reuters, (Nov. 23, 2022) https://legal.thomsonreuters.com/blog/trade-secret-litigation-101/.
[37] Pamela Passman, Eight Steps to Secure Trade Secrets, Wipo Magazine, (Feb. 2016), https://www.wipo.int/wipo_magazine/en/2016/01/article_0006.html
[38] FBI Launches Nationwide Awareness Campaign, Federal Bureau of Investigations, (July 23, 2015), https://www.fbi.gov/news/stories/economic-espionage.
[39] Dep’t of Justice, supra note 11.
[40] Federal Bureau of Investigations, supra note 37.
[41] Id.
[42] Dep’t of Justice, supra note 1.
[43] Id.
The University of Cincinnati Intellectual Property and Computer Law Journal 
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