Intellectual Property Crimes

By Gidseg, Randy; Santorelli, Bridget et al. | American Criminal Law Review, Summer 1999 | Go to article overview

Intellectual Property Crimes

Gidseg, Randy, Santorelli, Bridget, Walsh, Elizabeth, Wells, Greg, American Criminal Law Review


Owners of intellectual property are able to protect their rights by pursuing civil remedies. Yet the possibility of civil sanctions alone is insufficient to deter violators who steal trade secrets or infringe on others' trademarks, copyrights, or patents.(1) Indeed, some intellectual property thieves view civil damage actions as just another cost of doing business. It has been estimated that the theft of intellectual property rights in the United States cost over $300 billion dollars in 1997 alone, with high technology corporations most frequently targeted.(2)

The lack of deterrence associated with civil mechanisms led the federal government and most states to enact statutes designed to prevent the theft of intellectual property rights. These are often general statutes which can be interpreted to offer protection to the intellectual property at issue. Other statutes are specifically tailored to the type of intellectual property for which protection is sought. These latter provisions are used with increasing frequency to deter and punish perpetrators.

This article examines several areas of intellectual property law under which criminal prosecutions are brought. Section II covers the theft of trade secrets, while Section III discusses trademark counterfeiting. Next, Section IV addresses copyright infringement. Section V examines the new problems raised by online servers, while Section VI looks at patents and Section VII at art crimes. Finally, Section VIII discusses sentencing for intellectual property crimes.


Prior to the enactment of the Economic Espionage Act, addressed in Part A, no federal criminal statute dealt directly with the theft of intangible trade secrets. Parts B through E of this Section will cover alternative statutes federal prosecutors have used in the past, with limited success, to penalize the misappropriation of trade secrets. These include the National Stolen Property Act, the Trade Secrets Act, the Mail and Wire Fraud statutes, and the Racketeer Influenced and Corrupt Organizations Act. Finally, Part F describes state provisions used to combat trade secret theft.

A. Economic Espionage Act of 1996

In October 1996, discouraged by the failure of civil remedies to prevent trade secret theft, the inability of prosecutors to effectively use other criminal statutes, and the frequent efforts by foreign governments to obtain trade secrets from American companies, Congress made the theft of trade secrets a federal crime with the enactment of the Economic Espionage Act ("EEA").(3) The EEA established two criminal offenses under which governments can prosecute trade secret theft. The first offense, "economic espionage," arises only when the theft benefits a foreign government.(4) This carries higher penalties than the second offense, "theft of trade secrets," which is broader and generally concerns all trade secret theft.(5)

1. Definition of Trade Secret

The EEA defines trade secrets to include "all forms and types of financial, business, scientific, technical, economic, or engineering information ... whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing.... "(6)Although substantially similar to the trade secret definition in the civil Uniform Trade Secrets Act ("UTSA"),(7) the definition in the EEA is broader in an effort to modernize the law and "keep pace with growing technology, especially in the computer and information storage sectors."(8)

In order to protect property that is considered a trade secret, the owner of the property must take reasonable measures to keep it secret.(9) Additionally, the economic value of the information must be derived from the general public's lack of knowledge about it or the public's inability to readily access it through proper means.(10) This provision imposes a higher standard of self-protection on the owner of a trade secret than on owners of other types of property. …

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