Senate Committee Considers Legislation To Address Theft Of Trade Secrets

Senate Committee Considers Legislation To Address Theft Of Trade Secrets

On December 2, 2015, the Senate Judiciary Committee held a hearing entitled “Protecting Trade Secrets: the Impact of Trade Secret Theft on American Competitiveness and Potential Solutions to Remedy This Harm.”  The hearing focused on pending legislation, the Defend Trade Secrets Act (“DTSA”), S. 1890, which aims to help combat the losses associated with the theft of corporate trade secrets by allowing companies to go after thieves of confidential business information in federal court.

Unlike other forms of intellectual property, the protection of trade secrets is currently a matter of state law, with forty-seven states having enacted some variation of the Uniform Trade Secrets Act (“UTSA”).  The DTSA would make the protection of trade secrets consistent with the remedies provided for other forms of intellectual property, such as patents, trademarks and copyrights, which are all covered by federal civil law.  The DTSA would provide a private right of action under the Economic Espionage Act (“EEA”), which currently only authorizes criminal actions. 

DTSA was introduced by Senators Orrin Hatch (R-UT) and Chris Coons (D-DE) on July 29, 2015, and boasts 15 bipartisan co-sponsors.  A House version, H.R. 3326, was introduced the same day by Rep. Doug Collins (R-GA) and has 95 bipartisan co-sponsors.  Similar legislation was introduced in past sessions of Congress, but failed to garner as much support as the current bills. 

Senate Judiciary Committee Chairman Charles Grassley (R-IA) opened the hearing by noting the increasing importance of trade secrets to American companies.  Chairman Grassley cited a recent U.S. Chamber of Commerce report finding that publicly traded U.S. companies own an estimated $5 trillion worth of trade secrets.  He said that he has heard from a broad coalition of stakeholders about the need for a federal law to protect companies’ valuable trade secrets.  Senate Judiciary Committee Ranking Member Patrick Leahy (D-VT) noted that while there is much more to be done to address the problem of trade secret theft internationally, adopting a uniform federal policy at home in the U.S. is an important step. 

Industry representatives from Corning and DuPont testified that they are losing jobs and revenue because they lack the ability to defend their trade secrets under federal civil law.  They stressed the importance of trade secrets to their companies’ success and urged Committee Members to support the DTSA legislation.  Sharon Sandeen, a professor at Hamline University School of Law, was the lone skeptic at the witness table, arguing that the proposed bill will not directly address the problem of cyberespionage and that it will increase the costs of litigation and has the potential for abuse.

DTSA enjoys support from a number of notable industry leaders, including the Biotechnology Industry Organization, Boeing, Caterpillar Inc., Eli Lilly and Company, General Electric, IBM, The Intellectual Property Owners Association, Johnson & Johnson, Medtronic, Micron, National Association of Manufacturers, Nike, Procter & Gamble, Software & Information Industry Association, and the U.S. Chamber of Commerce. 

Senator Hatch stressed that given the bill’s support from a bipartisan mix of senators and key industry leaders, it is ready to be voted out of the Judiciary Committee and considered on the floor of the Senate.  In a statement released after the hearing, Hatch said that “Republicans and Democrats can agree that this bill is a win for American property rights and innovation.  Why wouldn’t we move this bill now?”

Reporter, Lauren M. Donoghue, Washington, DC, +1 202 626 8999, [email protected]

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