You Might Soon Have New Ammunition in Your Efforts to Combat Trade Secret Theft

If three Democratic senators have their way, some companies may soon be able to protect their valuable trade secret information under federal law. On July 17, 2012, senators from Wisconsin, Delaware, and Rhode Island introduced a bill, the Protecting American Trade Secrets and Innovation Act of 2012 that would allow companies that face certain kinds of trade secret theft to bring suit in federal court.Currently, employers cannot bring a federal civil claim for trade secret theft and are instead limited to pursuing such claims under state laws, which vary from state to state. This situation can present logistical difficulties and enforcement problems, especially for companies operating in multiple states and/or dealing with international trade secret theft. Limiting language in the bill indicates that it is designed to remedy just such complications.

Not every claim related to trade secret theft can be brought under federal law under the Act. Instead, the Act requires that companies bringing a federal trade secret civil action swear that the dispute in question “involves either substantial need for nationwide service of process or the misappropriation of trade secrets from the United States to another country.” While this limiting language means that there is only a narrow scope of trade secret thefts that could result in federal claims, it would still serve as a welcome new avenue for redress for companies in certain situations.

The senators introducing the bill feel it is necessary to fully protect companies from damaging trade secret theft. For example, bill sponsor Senator Kohl stated, “We cannot take lightly the threat of trade secret theft to American businesses, American jobs, and American innovation. This legislation is another simple and straightforward step we can take to help companies defend themselves against trade secret theft. It demonstrates our commitment at the federal level to protect all forms of a business’ intellectual property and their innovative spirit.” Senator Coons, another sponsor, echoed these sentiments: “When a company’s trade secrets are stolen, the company loses its competitive edge and the jobs of its employees are threatened. We must do all we can to ensure that American innovators are able to protect themselves from economic espionage. The Protecting American Trade Secrets and Innovation Act would establish a strong and uniform federal civil remedy for companies that deal in trade secrets to recover for their theft. It is my hope that the Senate takes up this bill for consideration and sends a clear signal that we will not sit idly by while American companies’ ideas are stolen.”

Visit http://www.govtrack.us/congress/bills/112/s3389 to track the progress of this bill and stay tuned for updates from Foley. For additional information on trade secret and noncompete issues, please go to http://www.foley.com/trade-secret-noncompete-litigation/.