Monday, May 5, 2014

Trade Secret Protection Finally Coming of Age?

A bipartisan bill that would allow businesses to safeguard their trade secrets using federal law was introduced in the Senate last week.  According to the press release accompanying the bill, the Defend Trade Secrets Act would give trade secrets the same kind of federal protections already enjoyed by patents, trademarks, and copyrights.

Sponsored by Senators Orrin Hatch (R–Utah) and Chris Coons (D–Del.), the bill would bolster the Economic Espionage Act by allowing businesses to seek, among other things:

  • civil ex parte orders that would (1) preserve evidence needed later for the prosecution of a violation, and (2) provide for the seizure of property used to commit or facilitate a violation;  
  • a broad range of potential damages, including (1) injunctive relief, (2) actual monetary loss or unjust enrichment, (3) royalties for the unauthorized use or disclosure of trade secrets, (4) exemplary damages (up to three times the amount of compensatory damages), and (5) attorneys’ fees.

 The bill also gives U. S. district courts original jurisdiction over civil lawsuits brought under the new law, establishes a five-year statute of limitations period, and includes definitions of “misappropriation” and “improper means” that are similar to those in the Uniform Trade Secrets Act, variations of which have been adopted in every state except New York and Massachusetts.

There have been several widely reported cases of trade secret thefts during the past year, and there seems to be broad-based support among business leaders for this type of legislation.  Add to that a growing perception that overseas business interests pose a significant threat of trade secret theft and the time seems right to finally lay out a blueprint for trade secret protection that can bring elements of uniformity and consistency of enforcement to an area of the law that historically has been a mixed bag of state-specific jurisprudence.

The Defend Trade Secrets Act already has the endorsement of the National Association of Manufacturers, the U. S. Chamber of Commerce, and some of the biggest names in the business world, who see it as a significant and long-overdue tool to protect their valuable intellectual property.

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