Earlier this year, a new bill was introduced in Congress seeking to add a federal civil cause of action for trade secret theft. With the most recent bill introduced by a bi-partisan coalition in the House, there appears to be momentum for the passage of federal trade secrets legislation this fall.
The proposed new legislation would permit a trade secret owner to bring a civil action in federal court for the theft or misappropriation of a trade secret. Currently, the Economic Espionage Act only authorizes federal actions by the Attorney General, not private parties, and plaintiffs are left to bring trade secret claims in state court.
Because companies conduct business across multiple states, there are inconsistencies and differences as to their interpretations of certain key issues across the state, such as the definition of a trade secret, what are reasonable measures to secure the secrecy, damages, and the statute of limitations. Further, although the Uniform Trade Secrets Act (UTSA) has been adopted by all states, except Massachusetts and New York, some courts have differing interpretations of the UTSA. In sum, a bill to provide uniform trade secret protection and federal remedies across the United States is needed.
On July 29, 2014, the House introduced a bill similar to the Senate’s “Defend Trade Secrets Act of 2014″ entitled the “Trade Secrets Protection Act of 2014.” The House bill tracks the Senate bill, but there are only a few notable differences. First, it does not permit a civil claim under the Economic Espionage Act, but permits a civil claim for “misappropriation of a trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce.” Also, it clarifies that it only covers misappropriation actions that occur on or after it is enacted.
There does not appear to be much opposition by the Senate to the House’s version of the trade secret bill. Therefore, we should expect to see some activity on the bills in early September.
In addition, the large number of companies and organizations in favor of the legislation, which includes IBM, 3M, Adobe, Boeing, Microsoft, Honda and DuPont, have generated a positive push for the bill.
Having a unified and harmonized law to address the discrepancies in trade secrets law will put trade secrets on the same level as patents, trademarks and copyrights. Progress of this bill through Congress will be closely monitored and followed.