With an 87-0 vote, the Senate approved the Defend Trade Secret Act (DTSA, S. 1890) on Monday. The bill, which was backed by the White House, amends the Economic Espionage Act of 1996 (EEA) to provide recourse for companies that experience trade secret theft.

Currently, the EEA criminalizes trade secret theft, but, according to Senate Finance Committee chair and bill co-sponsor Orrin Hatch (R-UT), relies on an overburdened Department of Justice for enforcement.  Moreover, companies seeking redress must contend with a patchwork of variable state laws.

The approved legislation creates a federal cause of action for trade secret misappropriation. The bill also includes a controversial ex parte seizure provision, which enables trade secret owners to obtain a seizure order to prevent the “propagation or dissemination” of a trade secret. Critics of this provision cite its potential for anti-competitive misuse.

According to a 2013 report from the Commission on the Theft of American Intellectual Property, intellectual property theft – including that of trade secrets – costs U.S. businesses more than $300 billion a year.  That panel, led by the former U.S. Ambassador to China Jon Huntsman, identified China, India, and Russia as the major culprits of IP theft.

The bill has received broad support from industry, which may bolster its prospects in House of Representatives, where it awaits consideration by the House Judiciary Committee.

If passed by the House, the bill would satisfy a requirement of the Trans-Pacific Partnership (TPP), which calls for its member countries to establish criminal procedures and penalties for trade secret theft.

We will keep you apprised as action is taken on the House version of the bill.  With over 125 co-sponsors there is already a sizable coalition supporting its passage.

– Jessica Miles and Anthony D. Sabatelli, PhD, JD

This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.