Transcripts For CSPAN2 Economic Espionage 20140820 : vimarsa

CSPAN2 Economic Espionage August 20, 2014

Next, the Senate Judiciary committee looks into economic espionage. In its todays edition of washington journal. Later the House Armed Services Committee Hears from defense secretary chuck hagel about the deal struck with the taliban to return Sergeant Bowe bergdahl. Lead today booktv is live at politics and prose in washington. Baguettes and we liked it on cspan2s booktv at 7 p. M. Eastern. Here are some of the highlights for this weekend. Find our Television Schedule one week in advance at cspan. Org and let us know what you think about the programs you were watching. Calls at 202s 663400 or email us at comments cspan. Org. Join a cspan conversation, like us on facebook, follow us on twitter. Boeing, and Eli Lilly Pharmaceuticals called on congress recently to address intellectual property and trade secret theft. Members are examining how companies are impacted and weathered the artificial laws to punish violators. Fbi assistant director of counterintelligence Randall Coleman also testified. This is one hour 25 minutes. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] the hearing of the Senate Judiciary subcommittee on crime and terrorism will come to order. I am expecting that my Ranking Member, senator lindsey graham, will be here shortly but i just saw him on the cspan screens i know he is on the floor and not here. But i permission from his staff to proceed and he will join us as soon as his schedule permits. I also want to recognize in the audience and were kind of post spent many a happy hour in him when hes working for chairman leahy. It could have been back in a different capacity. We are having a hearing today that is entitled economic espionage and trade secret theft, our our laws adequate for todays threats . Today the subcommittee is going to explore how we can better protect american businesses from those who try to steal their valuable intellectual property. American companies are renowned as being the most innovative in the world. Companies of every size and in every industry, from manufacturing to software, to biotechnology to aerospace, own large portfolios of legally protected trade secrets they have developed and innovate it. In some cases the secret sauce may be a companys most valuable asset. The theft of these secrets can lead to devastating consequenc consequences. For Small Businesses it can be a matter of life and death. The risk of trade secret theft has been around as long as thereve been secrets to protect. Theres a reason why cocacola has kept its formula locked away in a vault for decades. But in recent years the methods used to steal trade secrets have become more sophisticated. Companies now must confront the reality that they are being attacked on a daily basis by cybercriminals who are determined to steal their intellectual property. As attorney general holder has observed, there are two kinds of companies in america. Those that have been hacked, and those that dont know that they have been hacked. Today, a criminal can steal all of trade secrets the company owns from thousands of miles away without the company ever noticing. Many of the cyberattacks we are seeing are the work of foreign governments. China and other nations now routinely steal from american businesses and give a secrets to their own companies. Their version of competition. And lets be clear, we do not do the same to them. We are now going through a healthy debate in america about the scope of government surveillance, but theres no dispute about one thing. Our agencies do not steal from foreign businesses to help american industries. While Cyber Attacks are increasing, traditional threats remain. Company insiders can still walk off with trade secrets and sell to the highest bidder, competitors can still steal secrets through trickery or by simply breaking into a factory or office building. It is impossible to determine the full extent of the law the loss to american businesses. As a result of the theft of trade secrets and other intellectual property. There have been estimates that our nation may lose anywhere from one to 3 of our gross domestic products through trade secret theft alone. The Defense Department has said that every year and amount of intellectual property larger than that contained in the library of congress is stolen from Computer Networks belonging to american businesses and governments. And estimates of the valley of ip system by foreign actors are as high as 300 billion. General keith alexander, intel recently the head of nsa and Cyber Command at the pentagon, has characterized the cyber theft of American Intellectual property as quote the greatest transfer of wealth in history here and, of course, we are on the losing end of it. But no estimate and fully capture the real impact of trade secret theft. Because when other countries and foreign businesses steal our trade secrets, they are stealing our ideas. They are stealing our innovation. Most importantly they are stealing our jobs. In my own state of rhode island to continue to face unacceptably high unemployment. Despite having some of the most innovative businesses in the country. If we do not protect our businesses from those who steal the intellectual property, we are leading the innovation go to waste and were letting american jobs go overseas. In the past, some companies were reluctant to talk about this issue because no one likes to admit that they have been victimized. But many are now coming forward to speak out because they recognize how important it is that we Work Together to address this common threat. I particularly want to thank the Company Representatives who are appearing before us today in the second panel. As well as many, many others who worked closely with me and with other senators on this issue. Im encouraged that the Administration Last year released a blueprint for a strategy to combat trade secret theft. And agencies across the government are increasing efforts to address this problem. The Administration Must recognize that the theft of intellectual property is one of the most important Foreign Policy challenges we face, and it must communicate to china and other nations that stealing from our businesses to help their businesses is unacceptable. We in Congress Must do our part. We need to make sure that our criminal laws in this area are adequate and uptodate. Last fall, senator graham and i released a discussion draft of legislation designed to clarify that state sponsored overseas hacking could be prosecuted as economic espionage, and to strengthen criminal protection of trade secrets. We received valuable comments and suggestions about this legislation, and we look forward to hearing from our Witnesses Today about how to improve our laws and what we can do to help defend our industries. And we hope to introduce our legislation in the coming weeks. Companies also need civil remedies against those who steal from them. Whilst it was traditionally provided companies with remedies for misappropriation of trade secrets, there is currently no federal law that allows companies themselves to seek Civil Liberties remedies against those who steal from the. Senators cohen and patch every so introduce legislation to give victims of trade secret that the option of pursuing peace in federal court to senator flake has also introduced legislation to give companies a federal civil remedy for trade secret theft. I hope that the Judiciary Committee will act soon on legislation to strengthen both the criminal and civil protections against trade secret theft. And i look forward to working with those colleagues toward that goal. Today, we will hear from witnesses in government, industry, and the Nonprofit Sector confront the threat of trade secret theft on a daily basis. What i hope will be clear by the end of this hearing is that we need and all in approach to this hearing. We must strengthen our criminal laws, and our Law Enforcement agencies must privatize stopping trade secret that before it occurs and investigating and prosecute it when it does occur. I will add that there remains an urgent need for us to pass broader cybersecurity legislation, and i appreciate working with senator graham on that effort. I look forward to hearing from our Witnesses Today, and to working with my colleagues on both sides of the aisle to address this critical issue. Our first witness is randall c. Coleman, the assistant director of the Counterintelligence Division at the federal bureau of investigation. Mr. Coleman is responsible for ensuring that the fbi carries out its mission to defeat foreign intelligence threats. Mr. Coleman began his career as a special agent with the fbi in 1997, and has previously served as assistant special agent in charge of the san antonio division, chief of the counter espionage section, and special agent in charge of the little rock division. Prior to his appointment to the fbi, mr. Clements heard as an officer in the United States army for nine years ago delighted that he could join us today and we ask them to proceed with his testimony. Good afternoon, chairman whitehouse, i am pleased to be here today with you to discuss the fbis efforts to combat economic espionage and theft of trade secrets. The fbi considers the investigation of theft and trade secrets and economic espionage a top party. In 2012 alone, the National Intelligence executive estimate a range of loss to the us economy approaching 400 billion. To foreign adversaries and competitors who, by a legally obtaining a broad range of trade secrets, degraded our nations advantage in Innovative Research and develop an in the global market. This loss threatens the security of our economy and preventing such laws requires constant vigilance and aggressive mitigation. The fbi is diligent in working to investigate and apprehend targets pursuing economic espionage against usbased businesses, academic institutions, clear defense contractors and government agencies. It has made significant progress in putting some of the most egregious offenders time bars. Economic espionage and theft to trade sigtarp recently to the Insider Threat and the growing trend of cyber enabled trade secret theft. The Insider Threat employee may be seeing information for personal gain or maybe serving as a spy to benefit others. Foreign competitors aggressively target and recruit insiders to aid the transmittal of a companys most valuable proprietary information. The fbi, however, cannot protect the nations economy by acting alone. The fbi Counterintelligence Division Strategic Partnership program oversees a network of more than 80 special agents that are serving a Strategic Program coordinators who work handinhand with industry and academic institutions across the country. These Strategic Partnership coordinators conduct in person classified and unclassified threat presentations and briefings, and it serves as an early referral mechanism for reporting of possible economic thats been notch, trade secrets and cyberintrusion. Working through the more than 15,000 contacts nationwide on this Program Helps companies detect, deter and defend against attacks that are sensitive. The fbi takes seriously its role to investigate and every and targets pursuing economic espionage. And by forming Close Partnership with local, logical businesses and academic and government institutions, the fbi wishes to have greater impact on preventing and deterring the loss of trade secrets before any loss can actually occur. Thank you again for the opportunity to testify and i look forward to answering any other questions. Id like to talk to you about a couple things. First of all, have you any specific reaction to the draft legislation that senator graham and i circulated for discussion purposes . Sir, i will stand on this, if any legislation that allows the fbi to have a better advantage at going after our foreign adversaries as it relates to economic espionage, theft of proprietary information, the fbi is in favor of. Presumably the people were working with at the department of justice, do you support them speak with yes spent arguments and points they are making . Absolutely. One of the things that ive observed having watched this for a while is that whenever i hear about a case that is brought for an intellectual property theft, in every case that ive found so far theres been some nexus the oldfashioned type intellectual property theft. Somebody has taken a dvd home, somebody has taken a patented item out of the factory. We have seen an explosion in pure cyberintrusion and extraction through the cybernetwork of intellectual property with no other technique involved. And to my knowledge there have been no charges abroad, ever, against anyone for that kind of activity. I understand that these cases are very complicated. I understand that they have huge forensic issues, that theres an overlay with national security, with the Intelligence Services it requires a lot of effort to understand that some of the targets are overseas and that creates a whole other a rate of league at and other issues. Trust me, having served as the United States attorney i can see how very challenging these cases are to make. But when you have general alexander so were on the losing end of the biggest transfer of wealth in human history, he would like to see a little bit more actual hard prosecution activity. Can you tell me what you think is behind that difficulty . Is there anything we can do . Is a just a resource question . What can we do in congress to start putting points on the board against these people and criminal law courts . Chairman, i think you described it to a t. Obviously, when you get outside of the borders of the United States, and many of these investigations where theres a foreign nexus, our ability to conduct effective investigations is diminish greatly year i will tell you that we do have ongoing investigations that i would foresee as having a logical conclusion, that i think you would agree that as you described. In fact, the fbi has actually placed cyber assets and resources working with the Counter Intelligence resources at our national cyberintrusion task force, that are working hand in hand and shoulder to shoulder on these specific investigations. So i think technology plays a Critical Role in the advancement of technology, makes the threat that much more complicated. But i think theres been tremendous progress made by the fbi along with our partners at investigating these type crimes. And so im hopeful as we go forward that we would be up to demonstrate that we have been effective and will be effective in this arena. I wouldnt want us to judge that the fbi has not been effective. Ive been out there, i see what you guys do out there. If i had to take my concern and turn it into just a single phrase, it wouldnt be the fbi is not effective. It would be the fbi is so busy trying to keep track of who is coming through the doors and come to the windows and tried to warn all the companies that they are hacking into, that there seemed is a resource constrained in terms of taking all that effort which could be devoted to tracking all these attacks and trying to help our businesses, there just isnt the capability or enough capability to sit down and go through putting a prosecution package together, working through the intelligence agencies and doing all the other steps that need to be done. So in many ways im kind of throw you a friendly question saying, lets let us help you do what needs to be done in terms of the resources. I would want to take anybody off of what youre doing out a at in tgif in her to put enter to put prostitution packaged good that someone like having a robust response of the country that we are starting to, for want of a better example invite chinese colonels and generals who are behind pulling this kind of thievery off. I think another part of what i think is important is, and you described it, is the threat is so immense that thats what makes this outreach effort so important to what we are doing and bring in the private sector and academic institutions to work handinhand with us so we can actually try to get out in front of this threat. By your absolute right. The threat is so immense that the fbi cannot take this on alone. And whatever necessary help that we can get in those other industries, sectors, is of great help to us. Theres a provision in the last appropriation bill that requires the department of justice to do a report for us looking forward, looking out a couple years and thinking about what the structure should be like for addressing this particular threat. Its exploding as you know and it explodes even further every year. It grows at massive levels. Im not convinced at this point that the present setup makes sense. If you look at another area that has exploded, if you look at what happened with aviation and what its effect was on the conduct of warfare, you started with the army air effort as southern part of the signal corps, and they became a subpart of the army and was really until after world war ii that you had a full on u. S. Air force. And since then we have been a very successful leader in the theater of military operations, but until then we really we

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