Senate Proposes to Invite Trade Secrets to Join the IP Federal Law Party

While federal law protects patents, trademarks, and copyrights, trade secrets have largely been the odd man out of the intellectual property crew, left to the rarely used Economic Espionage Act, which makes trade secret theft a federal crime, and varying state law versions of the Uniform Trade Secrets Act. Senators Hatch (R-Utah) and Coons (D-Del.) plan to bring trade secrets to the IP federal civil law party by their proposed Defend Trade Secrets Act, which would provide a federal remedy for trade secret misappropriation—a remedy that currently does not exist outside of state law. The proposed legislation would allow trade secret owners to bring a federal civil claim for (1) a violation of the Economic Espionage Act and (2) for trade secret misappropriation related to a product or service used in, or intended for use in, interstate or foreign commerce. The Act provides for injunctions not only to prevent actual or threatened misappropriation, but also to require affirmative actions be taken to protect a trade secret. It even allows, in exceptional circumstances, an injunction that conditions future use upon payment of a reasonable royalty. The damages available under the proposed legislation are actual loss and unjust enrichment, or alternatively, a reasonable royalty. A showing of willful or malicious misappropriation allows for recovery of treble damages. And if the claim is made in bad faith or if a trade secret is willfully and maliciously misappropriated, attorneys’ fees may be awarded.

Interestingly, and perhaps most importantly, the Act would provide trade secret owners an avenue to obtain ex parte orders to preserve evidence by making copies of electronic storage mediums containing the trade secrets, and to seize any property used to commit or to facilitate the commission of misappropriation. This is a valuable tool to trade secret owners. It would aid in both preventing the irreparable harm caused by unauthorized use and dissemination of owners’ trade secret information, and in proving the alleged misappropriation took place.

The Defend Trade Secrets Act would harmonize trade secret law, allowing companies engaged in interstate commerce to draft uniform policies to protect their intellectual property, in turn cutting costs and removing insecurity as to the policies’ efficacy. It would allow federal courts better suited to operating across state and national borders to facilitate discovery and serve defendants or witnesses. And lastly, it would allow trade secrets to join the IP federal law party with patents, trademarks, and copyrights, making them no longer the odd man out.

Source: http://www.ipo.org/wp-content/uploads/2014/04/DefendTradeSecretsAct.pdf

For more information on this topic, please visit our Trade Secrets Litigation service page.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  Additional information about the IP law firm and its IP law attorneys may be found at www.klemchuk.com.

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