IP Alert: White House Launches Effort to Curb Trade Secret Misappropriation

by Orrick, Herrington & Sutcliffe LLP

On February 20, 2013, the White House issued a report outlining a new plan to combat trade secret theft from U.S. businesses.  Faced with the escalating theft of U.S. trade secrets and noting “the crucial role of trade secrets in the U.S. economy,” the report signals that the Administration has made the issue a top priority.  “Trade secret theft threatens American businesses, undermines national security, and places the security of the U.S. economy in jeopardy,” the report states.  “These acts also diminish U.S. export prospects around the globe and put American jobs at risk.”

This report comes on the heels of a February 12, 2013, executive order calling for improved government sharing of information about cybersecurity breaches, and a day after the Virginia-based cybersecurity firm Mandiant published a report on foreign government sponsorship of cyber-espionage to attack top U.S. companies. Observing that “the pace of economic espionage and trade secret theft against U.S. corporations is accelerating,” the report chronicles a number of case studies in which U.S. companies such as General Motors, DuPont, Dow Chemical, Ford, Motorola, and Boeing lost hundreds of millions of dollars from the theft of trade secrets.

Under the new plan, the White House will apply greater pressure on foreign governments to reduce incidents of trade secret theft, while also strengthening domestic practices and coordination with the private sector.  The plan outlines a five-point strategy:

  • Focus Diplomatic Efforts to Protect Trade Secrets Overseas.  Through its diplomatic relationships, the Administration will focus on developing trade secret protections and remedies under foreign law, as well as increasing international enforcement and cooperation.
  • Promote Voluntary Best Practices by Private Industry to Protect Trade Secrets.  On a domestic front, the U.S. Intellectual Property Enforcement Coordinator, in conjunction with various U.S. government agencies, will help facilitate efforts to develop voluntary best practices to mitigate risk factors associated with trade secret theft, such as research and development compartmentalization and strong company policies governing information security.
  • Enhance Domestic Law Enforcement Operations. The Administration will also expand discussions and coordination between the intelligence community and the private sector, while continuing to increase the Department of Justice and FBI’s emphasis on trade secret investigations and prosecutions.
  • Improve Domestic Legislation.  President Obama signed two important pieces of trade secret legislation into law in 2012, the Theft of Trade Secrets Clarification Act of 2012 and the Foreign and Economic Espionage Penalty Enhancement Act of 2012. The Administration will continue to focus on improvements to domestic legislation that curb trade secret misappropriation.
  • Public Awareness and Stakeholder Outreach.  The Administration will also continue its commitment to public outreach through websites, forums, and public awareness campaigns. The report lists 11 websites that provide information about trade secret theft.

At a strategy rollout, administration officials expressed hope that this new plan would go far in halting the theft of U.S. trade secrets.  “State sponsored trade-secret theft .?.?. embattles our status as world leader in innovation,” said White House coordinator of intellectual-property enforcement, Victoria Espinel.  The Administration’s new focus on trade secrets is intended to bring together public agencies, private industry, and international stakeholders, and is likely to lead to more collaboration among the public and private sectors to combat trade secret theft.

Click here to view the report titled “Administration Strategy on Mitigating the Theft of U.S. Trade Secrets.”


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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