Tomorrow's Senate Judiciary Committee hearing to tackle trade secrets theft

The AmeriKat keeping her trade secrets under
wraps....

Tomorrow at 10:00AM (EST), the US Senate Committee on the Judiciary is holding a hearing on "Protecting Trade Secrets:  the Impact of Trade Secret Theft on American Competitiveness and Potential Solutions to Remedy this Harm".  The hearing comes as the US government has upped their efforts to tackle increasing threats of Chinese-backed cyber attacks to the more-mundane employee-originated trade secret theft.  As part of this effort, Senator Orrin Hatch (Republican - Utah) and Senator Chris Coons (Democrat-Delaware) are backing proposed legislation  - the Defend Trade Secrets Act (DTSA)  - that would provide federal civil remedies for trade secrets theft.  Representatives Doug Collins (Republican - Georgia) and Hakeem Jeffries (Democrat-New York) have a companion bill in the House.

The 2015 bill (there was a failed 2014 incarnation in the 113th Congress) provides for federal jurisdiction for the theft of trade secrets, with the following provisions (broadly speaking):

• ex parte civil seizure orders to prevent the dissemination of trade secrets, with such seizure orders being narrowly tailored
• injunctions to prevent any actual or threatened misappropriation, but which do not prevent a person from accepting an offer of employment under conditions that avoid actual or threatened misappropriation
• damages for actual loss and any unjust enrichment
• triple damages if the trade secret is "wilfully and maliciously misappropriated"
• the award of reasonable attorney fees in certain circumstances
• some nifty provisions which would ensure that seized materials stored on electronic storage mediums are not connected to the Internet and that copies of the materials be encrypted. 

The Act also provides, in Section 3, that the Attorney General and a team of other heads of agencies, will submit to the Committees on the Judiciary of the House of Representatives and the Senate a report outlining the scope and breadth of trade secrets theft from US companies occurring outside the US and the extent to which such theft is sponsored by foreign governments or agents.  The report will also provide a breakdown of the trade secret laws in other countries and recommendations for legislative and executive branch actions to reduce the threat of trade secrets theft abroad. 

IPKat friend and one of the witnesses at tomorrow's hearing, James Pooley (former Deputy Director of WIPO), recently published a summary of his forthcoming article in the George Mason Law Review on the fantastic PatentlyO blog.  His post delves into the DTSA and picks apart the 2014 opposition to the DTSA from a group of law professors who argued that the provisions in the previous incarnation of the bill would chill labor mobility and that the seizure mechanism was too broad.  The outcome of the bill, the professors argued, would be the creation of a new storybook character into the IP cast of characters - the trade secret troll. 

As he writes in his post, Pooley states:

"This apocalyptic scenario is not only fanciful; it is absurd. While patents are exclusive rights that operate against the world, trade secrets provide no exclusivity and depend on a confidential relationship. The image of a “trade secret troll” may help draw attention to a political argument, but it is a myth, and deserves no serious consideration.

The reality of this legislation is simple and compelling. Giving trade secret owners the option to sue in federal court would fill a critical gap in effective enforcement of private rights against cross-border misappropriation that in the digital age has become too stealthy and quick to be dealt with predictably in state courts. The bills would accomplish this by effecting only very modest changes, relying heavily on existing laws and rules. The seizure provisions in particular are so narrowly drawn that only the most clearly aggrieved plaintiffs would risk invoking the procedure. Having no pre-emptive effect, the federal law would leave in place all relevant state laws and policies, including those relating to mobility of labor."

This summer two of the original group of law professors wrote a further letter opposing the 2015 DTSA (see link here).  One of their criticisms relates to terminology - trade secret "theft" as opposed to "misappropriation".  The AmeriKat remembers this terminology being subject to some debate during this year's AIPPI Congress in Brazil (which will be subject to a further post).  Although the AmeriKat doubts that nitty gritty issues of terminology will be subject to tomorrow's hearing, she very much looks forward to some entertaining debate during tomorrow's post-lunch slump.  In the meantime, she will be having feverish nightmares of the trade secret troll...