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White-Collar Crime | MONDAY, SEPTEMBER 29, 2014 | S3

intelligence agencies not known for seeking or for “pecuniary gain.” The National Stolen

headlines—put out a report with a blunt title: Property Act (NSPA) prohibits “transport[ing],
“Foreign Spies Stealing U.S. Economic Secrets transmit[ing], transfer[ing] in interstate or
in Cyberspace.” The report declared that foreign commerce any goods, wares, mer-
“[f]oreign economic collection and industrial chandise, securities or money . [k]nowing
espionage against the United States represent the same to have been . taken . by fraud.”
signiicant and growing threats to the nation’s 18 U.S.C. §2314. But federal authorities can
prosperity and security.” Putting the cost in go after only a fraction of the growing num-
the billions of dollars, the report was unusual ber of cases of cyber theft of trade secrets,
in identifying speciic countries as particu- and these statutes do not provide for private

lar sources of danger. “Chinese actors,” the rights of action.
EVER WONDER WHERE report observed, “are the world’s most active Further limitations of the EEA and the
and persistent perpetrators of economic espi- NSPA, subsequently remedied in part, were
THE PEOPLE WITH ALL onage,” while “Russia’s intelligence services revealed in the Aleynikov case involving theft
are conducting a range of activities to collec- of proprietary software code. Aleynikov, a
THE ANSWERS, GET tion economic information and technology former Goldman Sachs programmer, was pros-
from U.S. targets.”1
ecuted in the Southern District of New York
Since then, a growing number of stud- for allegedly violating the EEA and NSPA by
ALL THE ANSWERS?
ies—by government agencies, private com- taking proprietary Goldman trading code with
missions, think tanks, and congressional com- him when he moved to a competing irm. The
The truth is, you don’t need to have all the answers mittees—have documented the increasing Second Circuit held that Aleynikov’s convic-
when you know someone who does. At Marcum, toll that cyber theft of trade secrets is taking tion under the EEA could not stand because
on U.S. and European businesses. Last year, the EEA is limited to acts done “with intent
our team members put to work their decades of the Defense Security Service put out a spe- to convert a trade secret, that is related to
experience to answer your toughest questions cial report on the targeting of U.S. defense or included in a product that is produced or
contractors, noting the particular interest of placed in interstate or foreign commerce.”
quickly and effectively. Need some answers?
foreign thieves in advanced microelectronics The proprietary software code at issue did

Ask Marcum. marcumllp.com/nylj
and aeronautics systems.2 After an extensive not qualify, according to the Second Circuit,
investigation, the security irm Mandiant con- because it had not been developed to be
cluded that Chinese government-sponsored sold, i.e., “placed in interstate or foreign com-
hackers were organized to steal “broad cat- merce.” The court held Aleynikov’s convic-
egories of intellectual property, including tion under the NSPA could not stand because
technology blueprints, proprietary manufac- intangible property such as software code did
turing processes, test results, business plans, not constitute “goods, wares, merchandise,
pricing documents, partnership agreements, securities or money,” the kinds of property
and emails and contact lists from victim orga- covered by the NSPA.
5
nizations’ leadership.”3
The Computer Fraud and Abuse Act, 18
This spring, the Justice Department U.S.C. §1030, a federal statute that prohibits
indicted some members of the groups iden- unauthorized access to computers for the
tiied by Mandiant, alleging that they had purposes of taking information, does autho-
stolen, at various times, “trade secrets that rize private suits in some circumstances. But
would have been particularly beneicial to it requires a $5,000-loss threshold where a
Chinese companies at the time they were number of courts have limited the meaning of
stolen” and “sensitive, internal communica- “loss” to “reasonable costs incurred to inves-

tions that would provide a competitor, or an tigate, remedy, or prevent future occurrences
adversary in litigation, with insight into the of the unauthorized access” and “consequen-
strategy and vulnerabilities” of a number tial damages . that arise from ‘interruption
of U.S. businesses, including Westinghouse of service’” due to the unauthorized access,
Electric (Westinghouse), U.S. subsidiaries of thus excluding the value of the trade secrets
SolarWorld AG, United States Steel, Allegheny that were stolen.6
Technologies, the United Steel, Paper and For- State trade secret misappropriation causes
estry, Rubber, Manufacturing, Energy, Allied of action also have weaknesses as tools
Industrial and Service Workers International against overseas cyber thieves. The Uniform

Union and Alcoa.4
Trade Secrets Act—adopted in some form
by every state except New York and Mas- Network with inluencers eficiently, Develop new business using active records of Get to know General Counsel before you Access vital business development
Limitations on Current Remedies
sachusetts—prohibits “misappropriation” utilizing contact each corporation’s top- even meet them
information from a
of trade secrets. Among other things, the information for choice, go-to law irms with biographical single, searchable,
As that recent indictment indicates, there UTSA proscribes: (1) “use of a trade secret General Counsel, as for outside counsel
information such as easy-to-use tool
are federal criminal laws that may be put to of another”; (2) “without express or implied well as department- industry expertise,
use against foreign cyber thieves. State trade- consent”; (3) “by a person who . at the time head contacts
education, law irm
secret misappropriation laws may also pro- of . use, knew or had reason to know that experience and more
vide some degree of relief via civil remedies. his knowledge of the trade secret was derived

And, for imported articles, the International from or through a person who had utilized
Trade Commission’s §337 process may be improper means to acquire it.” “Improper
used to try to exclude goods based on sto- means” include “espionage through electronic Start Connecting
len intellectual property. But each of these or other means.”7
remedial possibilities has limitations that But there are several challenges to pur- Attend a demo or learn more at
have led U.S. policymakers to look for ways suing a UTSA claim against state-supported almlegalintel.com/ALI/InHouseDirectory
to strengthen U.S. defenses against cyber theft cyber-espionage. First, relying on these state-
of trade secrets.
law claims may raise dificult questions con-

The most basic limitation of federal crimi- cerning the extraterritorial reach of state law.
nal laws is the constraint posed by limited Second, state courts offer less broad discov-
investigatory and prosecutorial resources. ery than federal courts.
The Economic Espionage Act (EEA), 18 U.S.C. The International Trade Commission (ITC)
§§1831-1832, makes it a federal crime to steal affords another possible forum for victims of
trade secrets “for the beneit of foreign entity”
foreign cyber thieves. The ITC » Page S10