THE MAGAZINE

License to Steal

By Megan Gates

Even with the best prevention measures, sometimes trade secret theft occurs, forcing companies to seek legal action to protect their assets. The Uniform Trade Secrets Act has allowed “trade secret law to flourish in the United States” over the past few decades, according to Halligan. However, one of the most significant measures occurred recently when the ITC took steps to block the importation of a company’s products into the United States because it misappropriated a trade secret.

The business in question was TianRui Group, Co., which stole trade secrets from an American company, Amstead, for the manufacturing of railway wheels. TianRui was planning to use that trade secret information to create its own railway wheels and sell them to the United States. In an effort to protect its domestic business, Amstead filed a lawsuit that eventually reached the ITC. The commission decided that TianRui had misappropriated trade secrets from Amstead and issued an exclusion order barring the importation of TianRui’s railway products into the United States.

The ITC’s actions in the TianRui case have opened the door for additional American companies to bring their cases to the commission, giving businesses another alternative to prevent stolen trade secrets from affecting their competitive advantage in the United States, Halligan explains.

Additionally, the Obama admin-istration has made prosecuting trade secret theft a top priority, issuing a white paper last year on the topic. The paper, released in February 2013, outlines a plan of diplomatic efforts to protect trade secrets overseas through the Departments of Commerce, Defense, Justice, Homeland Security, State, and Treasury, as well as the U.S. Trade Representative.

“As an administration, we are committed to continuing to be vigilant in addressing threats—including corporate and state sponsored trade secret misappropriation—that jeopardize our status as the world’s leader for innovation and creativity,” the paper says. “We will continue to act vigorously to combat the theft of U.S. trade secrets that could be used by foreign companies or foreign governments to gain unfair economic edge.”

Along with efforts through the executive branch, the white paper also suggests improving domestic legislation. The paper proposes increasing penalties for economic espionage from 15 years in prison to 20 years and raising penalties for transferring, or attempting to transfer, trade secrets outside the United States.
 
Legislative Actions

While companies are adopting the mindset that trade secrets are businesses assets, Congress is also coming around to the idea. Two measures have been introduced, one in the House of Representatives and one in the Senate, that would allow businesses to bring a civil action to protect their trade secrets.

Currently, theft of trade secrets is a federal crime, but the Department of Justice has limited resources and lacks the authority to prosecute foreign actors working abroad, says Bronwyn Lance Chester, communications director for Sen. Jeff Flake (R-AZ). “Due to a gap in current law, these foreign entities are not subject to the same laws protecting trade secrets as U.S. entities. A business has little recourse when a foreign entity steals its trade secret,” according to Chester.

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