HR-9789-119
Referred to the House Committee on the Judiciary.
Sponsored by John Moolenaar (R-MI)
What it does
This bill would amend the federal economic espionage statute (18 U.S.C. § 1839) to expand the definition of "foreign instrumentality." Currently, a company must be substantially owned, controlled, or directed by a foreign government to qualify. This bill would add a second path: any entity simply domiciled in a "covered nation" — a category defined in 10 U.S.C. § 4872 that includes China, Russia, Iran, and North Korea — would automatically qualify as a foreign instrumentality, regardless of whether it has any proven government ties.
Who benefits
U.S. companies whose trade secrets are targeted by entities based in covered nations, particularly in technology, defense, pharmaceuticals, and advanced manufacturing. Federal prosecutors who would gain a broader legal tool to pursue economic espionage cases without having to prove direct government control. U.S. workers in industries most vulnerable to trade secret theft. National security agencies seeking stronger legal frameworks to deter foreign commercial intelligence operations.
Who is hurt
Entities domiciled in covered nations — including private companies with no proven government affiliation — that conduct legitimate business in the U.S. and could face criminal exposure under a broader standard. U.S. subsidiaries or joint ventures of companies headquartered in covered nations. Researchers, academics, and employees with ties to covered nations who work at or with such entities. Defense attorneys and civil liberties advocates who argue the change lowers the evidentiary bar in ways that could ensnare innocent actors. Companies in covered nations that compete lawfully in U.S. markets.
Supporters argue
Supporters argue that the current requirement to prove direct government ownership or control creates an easily exploited loophole, since adversary nations like China routinely use nominally private companies to conduct state-directed espionage. They contend that the FBI has identified economic espionage as one of the most significant threats to U.S. national security, with estimated annual losses in the hundreds of billions of dollars, and that domicile in a covered nation is a legally administrable proxy for state direction that reflects the structural reality of those economies.
Opponents argue
Opponents argue that replacing a conduct-based standard — proving actual government control — with a status-based one — mere domicile in a covered nation — risks criminalizing the actions of genuinely private foreign companies and their U.S. partners without evidence of state involvement. They contend this approach may raise Fifth Amendment due process concerns by imposing criminal liability based on national origin rather than culpable conduct, and could expose the U.S. to reciprocal trade and legal retaliation that harms American businesses operating abroad in those same countries.