Legislation proposes trade secret civil claims at federal level

The former director of the U.S. Patent and Trademark Office claims some intellectual property legislation is weak. The Economic Espionage Act of 1996 is a federal law that criminalizes trade secret violations. The law does not provide for civil actions against parties, like ex-employees who steal former employers’ intellectual recipes and use them to compete with theft victims.

Whether businesses can file civil claims over trade secret disputes comes down to a state level. The California Uniform Trade Secrets Act provides civil protections, as long as companies treat trade secrets like true secrets. Clear barriers must be set up to secure business data, whether a secret involves research and development or customer information.

The former patent office official feels American businesses are paying an enormous price for a federal government that puts trade secret protection on the back burner. Last year, the Department of Justice filed just 25 trade secret cases. Studies have found U.S. businesses are losing up to $480 billion every year to domestic and global trade secret violators.

The Defend Trade Secrets Act was introduced last spring to alter and upgrade the Economic Espionage Act. Under the proposal, federal law would permit civil claims for trade secret misappropriation and provide across-the-board legal backing for all U.S. companies. Trade secret protections and punishments would be elevated to the same level as copyrights, trademarks and patents.

Passage of the measure would be good news for companies that took part in a recent trade secret survey. Almost 60 percent of survey participants stated their companies had been targets of attempted or successful trade secret theft.

The former patent office director wrote trade secrets encompassed two-thirds of the “information value” in U.S. businesses. Consequently, David Kappos — a former U.S. Patent and Trademark Office and current advisor for the Partnership for American Innovation — is a big supporter of the new Defend Trade Secrets Act.

Source: The Hill, “Trade secrets: Promise of federal protection brings new hope for critical IP law,” David Kappos, June 30, 2014