Senate Bill Passes to Help Protect U.S. Intellectual Property - Global Trade Magazine
  April 14th, 2016 | Written by

Senate Bill Passes to Help Protect U.S. Intellectual Property

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  • The Defend Trade Secrets Act gives trade secrets federal legal protection.
  • The Defend Trade Secrets Act allows U.S. companies to collect damages if their trade secrets are stolen.
  • Opponents of the Defend Trade Secrets Act say the legislation “is likely to create new problems.”

The United States Senate last week passed legislation designed to combat the loss of hundreds of billions of dollars each year in the theft of corporate trade secrets. The Defend Trade Secrets Act would empower companies to protect their trade secrets in federal court by creating a federal private right-of-action.

The legislation was also introduced in the House of Representatives and is still pending there.

“In today’s global information age, there are endless examples of how easy and rewarding it can be to steal trade secrets,” said Senator Orin Hatch (R-Utah). “Yet there are no federal remedies available to help victim companies recover from their losses.”

“This bipartisan bill finally gives trade secrets the same legal protections that other forms of critical intellectual protect enjoy,” added Senator Chris Coons (D-Del).

Although the Economic Espionage Act of 1996 made trade secret theft a crime, the Department of Justice lacks the resources to prosecute many such cases, according to the legislation’s sponsors. State-level civil trade secret laws have also not been sufficient to stop interstate theft.

The Defend Trade Secrets Act builds on the Economic Espionage Act to create a uniform standard for trade secret misappropriation. It provides for injunctions and damages for the economic harm to American companies whose trade secrets are stolen and is designed to be 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 National Association of Manufacturers lauded the Senate for passing the Defend Trade Secrets Act.

“These days, a competitor can steal knowledge with the click of a mouse, costing a company good-paying jobs or even its entire business,” said NAM president and CEO Jay Timmons. “This is a critical issue facing manufacturers.”

Intellectual property can comprise up to 80 percent of the value of a company’s knowledge portfolio, Timmons added. Theft of these resources costs U.S. businesses $250 billion a year.

The DTSA has its opponents as well. A group of thirty-one law professors signed a letter in opposition to the legislation, claiming that it “will not solve the problems identified by its sponsors. Instead of addressing cyberespionage head-on, passage of the DTSA is likely to create new problems that could adversely impact domestic innovation, increase the duration and cost of trade secret litigation, and ultimately negatively affect economic growth.”

The professors also argue that a federal trade secret law is not “because there is already a robust set of state laws for the protection of such secrets,” and that “there are significant costs to creating” a new federal right to sue for trade secret misappropriation.