Peter Swire on Economic Espionage

FPF Senior Fellow Peter Swire writes today about a recent slate of indictments against members of China’s People’s Liberation Army for economic espionage.

Swire argues that industrial cyber-espionage is distinct from intelligence surveillance. Specifically, economic espionage is a crime. Further, such espionage has serious economic consequences:

Criminal laws against industrial espionage serve broader goals than simply vindicating the victim. Protection of trade secrets fosters economic efficiency and protects investment and investment in intellectual property. As a matter of new technology, companies invest in trade secrets while they prepare to enter a market, and many innovations then ripen into patents that are published to the world and make the innovation known to follow-on innovators. Military-grade cyber-attacks on those trade secrets steal from the innovator and also reduce the expected profit from the hard work of developing new products and services.

A related efficiency harm is that it is costly and difficult for ordinary corporations to protect themselves against military-grade cyber-attacks. The spending needed to protect trade secrets against that level of attack imposes costs across the broad swathes of industry that compete with other countries.