License to Steal

By Megan Gates

To help give companies and Americans an alternative course of action, Flake and Rep. Zoe Lofgren (D-CA) have both introduced measures in their respective chambers calling for a civil course of action for individuals and companies who have had trade secrets stolen from them.

Lofgren has introduced a new bill, the Private Right of Action Against Theft of Trade Secrets Act (H.R. 2466). The measure would amend the Economic Espionage Act of 1996 to authorize anyone who has suffered a violation of their trade secret to file suit in civil court against the violator. Those who prevail could collect damages for compensation or relief.

Chester says that Lofgren’s bill is a “valuable improvement” to current law, but that Flake’s measure would have more impact. “Sen. Flake’s bill does more to remedy the problem because it would also apply to thefts from cyberspace, which the Office of National Counterintelligence Executive called ‘a significant and growing threat to the nation’s prosperity and security,’” Chester explains. “Sen. Flake’s bill also would apply to thefts by foreign nationals from a foreign office of a U.S. company, which is a major source of trade secret theft.”

Flake’s measure, the Future of American Innovation and Research Act (FAIR Act), is similar to Lofgren’s in that it allows the owner of a trade secret to file a suit in U.S. District Court against someone who misappropriates, threatens to misappropriate, or conspires to misappropriate that trade secret. Where it differs, is that it would also apply to anyone—not just those in the United States—and it allows the court to order the seizure of any property used to or facilitate the theft of the trade secret.

This provision is vital, says Halligan, as it allows the court to take immediate action to prevent a trade secret from being transferred electronically anywhere else via e-mail or other means. “Unless you have the ability to immediately seize and secure the defendant’s computers, by the time you get there, they’ve transferred the trade secrets to another part of the country, another part of the world, or they’ve destroyed the evidence,” Halligan explains.

Both measures are pending in congressional committees, but Chester is optimistic that legislative action will be taken in some form. “Whether the bill moves in committee or on the floor is the prerogative of the majority party, but there is a great deal of bipartisan interest in this issue and recognition that there is a problem,” she says.

With the new mindset and the developments in the American legal system, Halligan says he feels like the “stars are aligning” to protect trade secrets more effectively. In his opinion, the United States has “the most robust and the best system in the world for the protection of trade secret assets, and if U.S. companies would take advantage of that, it would give them a huge competitive advantage.” 



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