IPO Sends Letter to Senate Leaders in Support of Defend Trade Secrets Act

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Yesterday, the Intellectual Property Owners Association (IPO) sent a letter to the Chairman and Ranking Member of the Senate Committee on the Judiciary expressing "strong support" for the Defend Trade Secrets Act of 2015 (S. 1890), which was introduced in the Senate in July.  A corresponding bill (H.R. 3326) was introduced in the House.

The Senate bill, which is sponsored by Sen. Orrin Hatch (R-UT) and which has received bipartisan support from more than a dozen co-sponsors, would amend Title 18 of the United States Code to provide Federal jurisdiction for trade secret theft.  In particular, the legislation would allow the owner of a trade secret to bring a civil action in U.S. district court for misappropriation of a trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce.  The Defend Trade Secrets Act would allow trade secret owners to secure a court order providing for the seizure of property necessary to prevent the propagation or dissemination of a trade secret (if the court determines, inter alia, that a temporary restraining order under Rule 65 of the Federal Rules of Civil Procedure would be an inadequate remedy).  The bill would also require the court issuing the order to hold a seizure hearing within seven days of the issuance of the order in which the party obtaining the order would have the burden of proving that the facts supporting the order are still in effect.

Other remedies provided by the legislation for the misappropriation of a trade secret include an injunction to prevent any actual or threatened trade secret misappropriation, payment of a reasonable royalty for future use of the trade secret in exceptional circumstances that render an injunction inequitable, damages for actual loss caused by the misappropriation of the trade secret, damages for any unjust enrichment caused by the misappropriation of the trade secret, exemplary (treble) damages when a trade secret is willfully and maliciously misappropriated, and attorney's fees for willful and malicious misappropriation of a trade secret or a bad faith claim of misappropriation.  Actions under the Defend Trade Secrets Act would have to be commenced not later than five years after the date on which the misappropriation is discovered (or by exercise of reasonable diligence should have been discovered).

The legislation would also require the Attorney General, in consultation with the Intellectual Property Enforcement Coordinator, Director of the U.S. Patent and Trademark Office, and heads of other appropriate agencies, to submit to the Senate and House Judiciary Committees a report on:

(1) The scope and breadth of the theft of the trade secrets of United States companies occurring outside of the United States.
(2) The extent to which theft of trade secrets occurring outside of the United States is sponsored by foreign governments, foreign instrumentalities, or foreign agents.
(3) The threat posed by theft of trade secrets occurring outside of the United States.
(4) The ability and limitations of trade secret owners to prevent the misappropriation of trade secrets outside of the United States, to enforce any judgment against foreign entities for theft of trade secrets, and to prevent imports based on theft of trade secrets overseas.
(5) A breakdown of the trade secret protections afforded United States companies by each country that is a trading partner of the United States and enforcement efforts available and undertaken in each such country, including a list identifying specific countries where trade secret theft, laws, or enforcement is a significant problem for United States companies.
(6) Instances of the Federal Government working with foreign countries to investigate, arrest, and prosecute entities and individuals involved in the theft of trade secrets outside of the United States.
(7) Specific progress made under trade agreements and treaties, including any new remedies enacted by foreign countries, to protect against theft of trade secrets of United States companies outside of the United States.
(8) Recommendations of legislative and executive branch actions that may be undertaken to—
    (A) reduce the threat of and economic impact caused by the theft of the trade secrets of United States companies occurring outside of the United States;
    (B) educate United States companies regarding the threats to their trade secrets when taken outside of the United States;
    (C) provide assistance to United States companies to reduce the risk of loss of their trade secrets when taken outside of the United States; and
    (D) provide a mechanism for United States companies to confidentially or anonymously report the theft of trade secrets occurring outside of the United States.

Following introduction of the bills, S. 1890 was referred to the Senate Judiciary Committee and H.R. 3326 was referred to the House Judiciary Committee and the Subcommittee on Courts, Intellectual Property, and the Internet.

The IPO letter in support of the legislation contends that "current legal tools available to remedy trade secret theft are inefficient," and that "current federal law in this area has limitations."  While commending the FBI and Department of Justice for doing a good job enforcing the Economic Espionage Act, the IPO notes that both "have limited resources and numerous priorities and are not able to pursue all trade secret thefts."  The IPO points out that the Defend Trade Secrets Act would allow its members to protect their trade secrets.  In addition, the IPO argues that enactment of the legislation "will place the United States in a position to promote strong trade secrets protection globally, both by creating the “gold standard” by which countries can model their trade secrets laws and by placing the United States in a better position to negotiate trade agreements and other international treaties that provide strong trade secrets protection."

Written by:

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McDonnell Boehnen Hulbert & Berghoff LLP on:

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