Bipartisan trade secrets bill passes U.S. Senate

By Richard A. Hertling, Layth Elhassani and Kaitlyn McClure 

on April 6, 2016

POSTED IN CONGRESSIONAL ACTION, INTELLECTUAL PROPERTY PROTECTION

In a major win for the American innovative economy, the U.S. Senate on Monday unanimously passed S. 1890, the Defend Trade Secrets Act (DTSA), 87-0. The bill stands a good chance of getting enacted into law, which would be a significant milestone for intellectual property protection particularly in this election year.

Trade secrets are increasingly valuable to companies in all industry sectors and all sizes. From product designs to computer algorithms, trade secrets are an essential form of intellectual property. Often developed at great cost, they can give companies a competitive edge in today’s challenging global markets and drive key segments of the U.S. economy. But trade secret federal legal protections are inadequate and trade secret theft is estimated to cost the U.S. economy $300 billion annually.

Currently, while owners of patents, copyrights, and trademarks can enforce their rights under federal law, a victim of trade secret theft must rely on an array of state laws to protect their rights when their know-how is stolen.  The DTSA would amend the Economic Espionage Act of 1996 (“EEA”) to create a federal civil claim and remedy for trade secret misappropriation.  This critical update will modernize trade secret protection by creating a unified, consistent body of law nationwide, without preempting existing state laws.

In addition to providing federal court jurisdiction and streamlining the discovery and subpoena process in multi-jurisdictional cases, DTSA provides expedited relief on an ex parte basis in “extraordinary” circumstances when time is of the essence and the thief would not obey an injunction. By allowing a limited seizure of the allegedly stolen trade secret from a party accused of misappropriation, DTSA facilitates the immediate, cross-jurisdictional action often necessary to prevent destruction or dissemination of stolen trade secrets. The bill includes appropriate safeguards to ensure this relief is not abused.

The bipartisan Senate bill, introduced by Senators Orrin Hatch (R-UT) and Christopher Coons (D-DE), is overwhelmingly supported by U.S. businesses.  Covington represents the Protect Trade Secrets Coalition, a cross-industry group of leading American companies working in support of a federal civil remedy for trade secret theft.  The coalition includes innovative businesses in a wide range of industries, including biotech, software, semiconductors, consumer goods, medical devices, automobiles, aerospace, and agriculture.  

The legislation is supported by a large number of corporations, trade associations and industry groups, including the U.S. Chamber of Commerce; the National Association of Manufacturers; BSA The Software Alliance; the Information Technology Industry Council; the Alliance of Automobile Manufacturers; the Association of Global Automakers; the Internet Commerce Coalition; the New England Council; the Semiconductor Industry Association; the Software and Information Industry Association; and the Telecommunications Industry Association.  Importantly, the White House has also voiced strong support for the DTSA.

Supporters of S. 1890 now turn to the U.S. House of Representatives, where companion legislation (H.R. 3326) has been introduced by Representatives Doug Collins (R-GA) and Jerrold Nadler (D-NY), and already has the support 128 bipartisan cosponsors. Monday’s overwhelming Senate vote of support hopefully will provide momentum for quick approval in the House, so this important bill can be sent to the President’s desk.

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