The "benefit" of spying: defining the boundaries of economic espionage under the Economic Espionage Act of 1996.

Author:Edelman, William J.
Position:NOTE
 
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INTRODUCTION 1. THE PROBLEM: SETTING BOUNDARIES ON THE LEA A. The Larger Problem: Congress's Clumsy Definitions in White Collar Criminal Statutes B. The Specific Issue: Applying the LEA's Foreign Benefit Element (United States v. Lan Lee) II. THE STATUTE A. Text B. Legislative History 1. Purposes of the LEA 2. The four iterations of [section] 1831's wording 3. Congress's two methods of constraining the reach of the LEA III.ADVANTAGES OF THE MENS REA APPROACH TO LIMITING THE REACH OF THE EEA A. Focusing on the Real Controversy B. Avoiding Disingenuous Arguments C. Maintaining Fact Sensitivity IV. CASE LAW FROM ANALOGOUS STATUTES SUPPORTS THE MENS REA APPROACH A. Trading with the Enemy Act and Von Clemm: No Benefit Means Not One Dollar B. The Espionage Act: Applying a Foreign "Advantage" Element 1. Morison: benefit means benefit 2. Gorin: endorsing a broad reading of "benefit" and focusing on the mens rea a. Reining in the foreign advantage/benefit element: Gorin's solution b. Extending Gorin's insight: a proposed test for use with [section] 1831 cases CONCLUSION INTRODUCTION

In November 2009, federal jurors in San Jose delivered a mixed message to courts and prosecutors with their verdict in United States v. Lan Lee, (1) the first-ever jury trial on charges of economic espionage under the Economic Espionage Act of 1996 (LEA). While they acquitted defendants Lan Lee and Yuefei Ge on counts related to one alleged victim, the jury deadlocked on charges associated with a second victim, with nine jurors voting to acquit and three voting to convict on the economic espionage charge. (2) In brief conversations with jurors following the mistrial, attorneys for both sides caught a glimpse of the issues that hung the jury. (3) One of those issues, the definition and boundaries of the foreign benefit element of the economic espionage charge, is the topic of this Note.

Specifically, this Note discusses how courts should interpret and constrain the foreign benefit element of the economic espionage statute. The foreign benefit element requires the government to prove that the defendant intended or knew that the trade secret theft would benefit a foreign government, instrumentality, or agent. This Note argues that relying on a narrow interpretation of the word "benefit" to limit the reach of the foreign benefit element is inappropriate in light of the text and legislative history of the statute. (4) Instead of asking whether a particular benefit is the kind of benefit covered by the statute, courts should reframe the issue in terms of the defendant's mens rea, focusing on whether the defendant intended or knew of a benefit to a foreign government, instrumentality, or agent. This framing avoids disingenuous arguments that certain benefits are not actually benefits and asks the real question confronting courts in scenarios like the Lan Lee case: how far down the benefit chain of causation can the EEA reach in criminalizing possession of stolen trade secrets?

Part I of this Note connects this issue to the larger problem of incoherent and vague definitions of mens rea and harm in federal white collar criminal statutes, and then provides an overview of the Lan Lee case relevant to a discussion of the foreign benefit element. It also puts Lan Lee in context, arguing that the resolution of this issue in early cases like Lan Lee will have an especially broad impact in light of the relative infancy of federal prosecutions under the EEA juxtaposed with the significant federal law enforcement effort targeting espionage.

Because this issue presents a question of statutory interpretation, the analysis begins with a discussion of the statute. Part II first discusses the relevant text of the EEA, arguing that the law's language strongly favors a broad interpretation of the word "benefit." Part II then analyzes the legislative and drafting history of the EEA, describing the statute's purpose and identifying two different approaches to constraining the foreign benefit element that Congress articulated during the legislative process--neither of which involved a narrow interpretation of "benefit." The first approach, limiting the definition of "foreign instrumentality," does not help courts faced with a scenario like the Lan Lee case. The second approach, focusing on the mens rea and limiting the definition of knowledge or intent, however, does provide an appropriate framework for addressing such issues.

Part III discusses three advantages of framing the issue in terms of the mens rea over framing it as a question of "benefit." First, the mens rea formulation more accurately reflects the actual dispute between the parties and allows both sides to present their best arguments to the court for consideration. Second, the definitions of "knowledge" and "intent" are inherently flexible, providing courts an obvious and traditional means of limiting the reach of a criminal statute, whereas "benefit" has much less flexibility without resorting to disingenuous arguments. Third, framing the question in terms of the defendant's mens rea preserves the role of the factfinder and remains sensitive to the nuances of different cases, while the narrow-benefit approach categorically excludes entire classes of prosecutions without regard for the potential strength of the evidence.

In Part IV, this Note looks to the case law on statutes analogous to the LEA, arguing that courts faced with similar questions under other espionage statutes have rejected a focus on the "benefit" and embraced a closer look at the defendant's mens rea by incorporating the concept of proximate cause into the analysis. Borrowing from those cases, Part IV offers one test that courts might use to interpret the mens rea of the foreign benefit element.

  1. THE PROBLEM: SETTING BOUNDARIES ON THE LEA

    1. The Larger Problem: Congress's Clumsy Definitions in White Collar Criminal Statutes

      The "confused and inconsistent ad hoe approach" to defining and interpreting mens rea in federal criminal statutes has been well documented and lamented for decades. (5) With over one hundred different varieties of mens rea standards appearing in Title 18 of the United States Code alone, (6) courts confronted with new criminal statutes can rely on neither a uniform Model Penal Code-like clarity in the meaning of any particular word nor consistent results when reasoning by analogy to statutes with similar language.

      In particular, in the context of white collar criminal statutes, Congress's clumsy and vague definitions of the harm it is seeking to address further confuse courts charged with defining the boundaries of white collar statutes. (7) Attaching a fifteen-year prison term to the vague notion of intent to benefit a foreign government is not an aberration, but rather is the latest example of a trend of criminalizing intentions to cause other vague harms like "corruptly giv[ing]" money to a public official, "depriv[ing] another of the intangible right of honest services," or "defraud[ing] in 'connection with a security.'"(8)

      In defense of Congress, however, crystal clear statutes may not be realistic or desirable. Indeed, vague definitions could be the unavoidable byproduct of the very concept of "white collar crime," an amorphous label that often attaches to any sophisticated or complex economic crime. (9) Moreover, Congress may deliberately avoid clearly and narrowly defining the proscribed activity because it perceives the government to be at a comparative disadvantage to the wealthy and powerful defendants the statutes often target. (10) Or, it could just be poor drafting. Regardless, the result is statutes with certain core applications and uncertain boundaries that courts are left to define on their own. (11)

      While a comprehensive solution to this problem is both beyond the scope of this Note and unlikely as a practical matter, (12) the bottom line for legislators and practitioners is that the current system gives courts significant power and flexibility in setting boundaries on white collar statutes. (13) Judges can and do legitimately interpret a "knowing" mens rea requirement in one statute to be entirely different from a "knowing" requirement in a different statute. If Congress wants to avoid surprises in the way its statutes are molded in the crucible of real-world application, it should err on the side of detailed textual evidence of its intent coupled with comprehensive legislative history to curtail interpretations unmoored from the actual purpose of the law.

    2. The Specific Issue: Applying the EEA's Foreign Benefit Element (United States v. Lan Lee)

      This Note addresses an issue raised during a recent prosecution of two defendants under the Economic Espionage Act of 1996. (14) The case, United States v. Lan Lee, was the first jury trial ever conducted in the United States charging a defendant with economic espionage for violating 18 U.S.C. [section] 1831. (15) Section 1831 makes it a crime to, among other things, possess a stolen trade secret intending or knowing that the offense will benefit a foreign government. (16) The government alleged that the two defendants, Lan Lee and Yuefei Ge, stole trade secrets from their Silicon Valley employer as part of a plan to start a competing business in China. (17) The government further alleged that the defendants intended to obtain seed money for the business from a Chinese government program that provided grants to start-up businesses in select high-technology fields. (18)

      To prove the element of [section] 1831 requiring that the defendants knew or intended that the crime would benefit a foreign government, the prosecution offered an expert on the 863 Program, the Chinese government funding source the defendants allegedly pursued. (19) During direct examination, the prosecutor elicited testimony from the expert that the Chinese government would benefit economically from funding a start-up business through the 863 Program by way of an increase...

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