A Comparative Approach to Economic Espionage: Is Any Nation Effectively Dealing with this Global Threat?

Abstract

for their excellent editorial comments, and Pat Laflin who is an expert in this field. Additional thanks goes to all the SEALS 2015 Conference participants who provided me with significant comments and advice during my presentation of this paper.

Transnational state-sponsored cyber economic espionage: a legal quagmire

“…Espionage for national security purposes has long been widely practiced and tacitly tolerated, with countries largely escaping any accountability for their espionage activities under international lawalthough individual spies can be prosecuted under domestic laws if subject to the jurisdiction of that country's judicial system (Blinderman and Din, 2017;Lotrionte, 2015;Pun, 2017). Likewise, spying to gain economic advantage is certainly nothing new, despite various domestic laws which can be brought to bear to punish such conduct (Lotrionte, 2015;Reid, 2016). However, in recent years, technology has enabled economic espionage to be conducted on a massive scale, from afar without the need to physically cross national borders, relatively inexpensively, and often in relative anonymity (Crootof, 2018;Rowe, 2016).…”

“…Transnational state-sponsored cyber economic espionage is a growing threat to developed economies which have robust industry largely reliant on the value of informationsuch as the United States economy (Lotrionte, 2015;Reid, 2016;Rowe, 2016). Numerous high profile hacking incidents by China, North Korea, and Russia perpetrated against companies based in the United States have raised public consciousness of the vulnerability of companies, and the United States economy more generally, to cyber espionage from abroad (Anderson, 2017;Banks, 2017b;Blinderman and Din, 2017;Carlin, 2016;Reid, 2016). Policymakers are grappling with how to craft effective, lawful responses which deter such espionage while avoiding an escalation into an all-out cyberwar (Blinderman and Din, 2017;Crootof, 2018).…”

“…Transnational state-sponsored cyber economic espionage is the unauthorized cross-border collection of information by foreign governments or state-sponsored actors via cyber means for the purpose of gaining an economic benefit (Lotrionte, 2015;Reid, 2016). 1 In recent years, cyber economic espionage has become a pressing concern, with technological developments enabling espionage to be conducted remotely on a massive scale and with relatively low barriers to entry in terms of both cost and technical expertise, resulting in estimated losses to the United States economy in the billions of dollars per year (Anderson, 2017;Banks, 2017b;Carlin, 2016;Crootof, 2018;Reid, 2016;Rowe, 2016). While cyber economic espionage committed by insiders or organized crime groups without state sponsorship is also a significant issue (Inserra, 2017;Levandoski, 2018), this article will focus on transnational state-sponsored cyber economic espionage due to the unique concerns raised by this type of espionage.…”

“…Although concern regarding foreign economic espionage was the primary motivator for passage of the Economic Espionage Act, federal prosecutors have brought far more prosecutions for domestic trade secret theft ( § 1832 violations) than for foreign economic espionage ( § 1831 violations; Levandoski, 2018). Overall, the Economic Espionage Act has failed to live up to its promise, as there have been few prosecutions, even fewer convictions, and sentences have been relatively light (Levine and Seaman, 2018;Reid, 2016).…”

“…This is of particular concern with regard to cyber activities inflicting transboundary harms, as it is not uncommon for countries' laws to fail to keep pace with technological developments facilitating relatively newer harmful acts (Marion, 2010;Perloff-Giles, 2018). Moreover, due to political, economic, and cultural differences between countries, not all countries share the United States' view that intellectual property is a protected property right (Danielson, 2009;Reid, 2016). Thus, some countries may not criminalize trade secret misappropriation, in which case a defendant located in that country will not be extradited to the United States to face charges under the Economic Espionage Act, as the dual criminality requirement was not met (Perloff-Giles, 2018; Reid, 2016).…”