Economic Espionage as Reality or Rhetoric: Equating Trade Secrecy with National Security

46 Pages Posted: 21 Jan 2016

See all articles by Rochelle Cooper Dreyfuss

Rochelle Cooper Dreyfuss

New York University - School of Law

Orly Lobel

University of San Diego School of Law

Date Written: January 19, 2016


In the last few years, the Economic Espionage Act (EEA), a 1996 statute that criminalizes trade secrecy misappropriation, was amended twice, once to increase the penalties and once to expand the definition of trade secrets and the types of behaviors that are illegal. Recent developments also reveal a pattern of expansion in investigation, indictments, and convictions under the EEA as well as the devotion of large resources by the FBI and other agencies to warn private industry against the global threats of trade secret theft. At the international level, the United States government has been advocating enhanced levels of trade secrecy protection in new regional trade agreements This article asks about the effects these developments on innovation. The article examines the rhetoric the government is using to promote its trade secrecy agenda, uncovering that the argument for greater protection appears to derive at least some of its power from xenophobia, and most importantly, from a conflation of private economic interests with national security concerns, interjecting a new dimension to the moral component of innovation policy debates. Analyzing recent empirical research about innovation policy, we ask about the effects of these recent trends on university research and on private market innovation, including entrepreneurship, information flows and job mobility. We argue that, paradoxically, the effort to protect valuable information and retain the United States’ leadership position could disrupt information flows, interfere with collaborative efforts, and ultimately undermine the inventive capacity of American innovators. The article offers suggestions for reconciling legitimate concerns about national security with the balance intellectual property law traditionally seeks to strike between incentivizing innovation and ensuring the vibrancy of the creative environment. We conclude that a legal regime aimed at protecting incumbency is not one that can also optimally foster innovation.

Keywords: intellectual property, patents, non-competes, trade secrets, employment law, human capital, incentives, experimental studies, behavioral law and economics, antitrust, competition law, innovation policy, knowledge networks, commons, contract theory, copyright, creativity, motivation

JEL Classification: O34, O15, J41, A10, J21, J60, J61, J58, J62, J63, J68, K00, K2, K21, L51, K32, I1, I18, H3, H51, A13

Suggested Citation

Dreyfuss, Rochelle Cooper and Lobel, Orly, Economic Espionage as Reality or Rhetoric: Equating Trade Secrecy with National Security (January 19, 2016). Lewis & Clark Law Review, 2016, San Diego Legal Studies Paper No. 16-207, Available at SSRN:

Rochelle Cooper Dreyfuss

New York University - School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-998-6258 (Phone)
212-995-4760 (Fax)

Orly Lobel (Contact Author)

University of San Diego School of Law ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States


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