In what has become an annual rite, legislators from both sides of the aisle in the U.S. Congress again have proposed a bill seeking to create a private right of action allowing companies to assert civil trade secret misappropriation claims under federal law (which would supplement the existing patchwork of state law remedies). As we have blogged previously, similar bills were introduced in 2013 and 2014, but despite some progress they were not enacted into law.
Like past legislative efforts, the Defend Trade Secrets Act of 2015 would amend the Economic Espionage Act of 1996 (which allows prosecutors to bring criminal charges relating to trade secret theft) to empower private companies to bring civil suits to protect their trade secrets.
The previous bills were criticized for, among other things, allowing federal courts to issue relatively broad orders for seizure of purported trade secret materials and information. Mindful of such criticism, this year's Defend Trade Secrets Act narrows the circumstances in which an ex parte seizure order can be obtained, and in order to prevent hacking of seized devices, the bill bars a seized electronic storage medium from being connected to the internet without the consent of both plaintiff(s) and defendant(s). It also allows for defendant(s) to make a motion to encrypt any material seized that is stored on an electronic storage medium.
The Defend Trade Secrets Act of 2015 was introduced on July 29, 2015 and supported by Senators Orrin Hatch (R-UT), Chris Coons (D-DE), Jeff Flake (R-AZ), Dick Durbin (D-IL), Thom Tillis (R-NC), Tammy Baldwin (D-WI), and U.S. Representatives Doug Collins (R-GA) and Jerrold Nadler (D-NY). It is also backed by a varied assortment of trade associations and corporations.
Will this year’s break the pattern established by past bills of failing to advance out of Congressional committees? As in the past, there seems to be enough concern in the business community, coupled with periodic news stories about trade secret theft, to support introduction of the bill. Absent a defining trade secret theft event, however, that breaks through into broader public consciousness and crystallizes public opinion toward the necessity of creating a federal trade secret theft private right of action, the Defend Trade Secrets Act of 2015 may suffer a fate similar to the earlier bills. Stay tuned.
- Member of the Firm