When the White House rolled out its new strategy for combating trade secret theft, Attorney General Eric Holder warned ominously of “a significant and steadily increasing threat to America’s economic and national security interests.” Trade secret theft, he said, “can inflict devastating harm on individual creators, start-ups, and major companies.” Rallying the nation for all-out war against a shadowy enemy, he declared: “There are only two categories of companies affected by trade secret theft: those that know they’ve been compromised and those that don’t know yet.”
Apparently there is a sizable third category: those that don’t care.
When it released its strategy in February, the White House said it would review potential policy changes that would help fight trade secret theft. With a notice in the Federal Register, it solicited public comments on how best to do that.
The response was underwhelming: only 13 people or entities weighed in. (By contrast, the U.S. Patent and Trademark Office received 374 public comments on America Invents Act rulemaking.) One commenter used the invitation to air some generalized gripes about the government. The other dozen represented such diverse interests as Intel Corporation, IP valuation experts Ocean Tomo, LLC, the Intellectual Property Owners Association, the American Intellectual Property Law Association (AIPLA), and the U.S. Chamber of Commerce. They weighed in with substantive comments touching on four common themes: (1) problems with the Economic Espionage Act (“EEA”) and the Computer Fraud and Abuse Act (“CFAA”); (2) the need for a right to sue in federal court for trade secret theft; (3) proposed domestic policy changes; and (4) proposed international policy changes.
Problems with Current Laws (EEA and CFAA): Commentators identified what they considered to be the largest flaw in the EEA: namely, that it does not apply to conduct committed wholly outside of the United States, even if the victim is a U.S. corporation and the inflicted harm results in the States. Commenters also noted that the CFAA does not make up for the aforementioned existing limitations in the EEA. The CFAA generally prohibits “access” to a computer “without authorization or exceeding authorized access,” but there is a split of authority regarding what those two phrases mean. Commenters worried this permits certain foreign entities or individuals to continue to escape liability.
For example, commenters noted that a foreign entity could improperly receive and use trade secret information from an individual who was authorized to access a computer and authorized to view trade secrets for a limited purpose—an employee, for instance—and the U.S. company would have no redress against the foreign entity under existing law.
The Right to Sue in Federal Court: Almost all commenters requested a federal civil cause of action for trade secret theft that would not pre-empt state statutes. And a number of commenters suggested that this federal civil cause of action should target solely the misappropriation of U.S. trade secrets by foreign entities or individuals. (An earlier Trade Secrets Watch post expressed a different view.)
Many commenters suggested reviving a bill that was previously introduced in Congress, but never enacted: S. 3389, the Protecting American Trade Secrets and Innovation Act of 2012 (“PATSIA”). Such legislation, according to commenters, would achieve two important goals. First, it would provide the necessary federal civil cause of action that is missing in the current EEA. Second, it would serve to speed up the process of enforcing trade secret laws by giving trade secret owners access to federal courts, in addition to state courts (which often move more slowly) and the International Trade Commission. Trade secret owners often have the greatest knowledge, resources, and motivations to stop trade secret theft.
Proposed Domestic Level Policy Changes: On a policy level, commenters also suggested several non-legislative changes. For example, despite President Clinton’s optimism that the EEA would “help us crack down” on IP misappropriation, one commenter noted that the government prosecuted fewer than five cases per year under the EEA in the 12 years since its enactment. Commenters suggested reviewing the reasons behind such limited prosecution and focusing on fixing the cause. To the extent inadequate funding or resources are an issue, commenters proposed that the U.S. government focus efforts and funding on increased criminal prosecution of trade secret offenses under the EEA. Commenters also encouraged increased public education and awareness of trade secret protections and trade secret thefts.
Proposed International Level Policy Changes: Commenters suggested collaborations with other foreign entities, for example through free trade agreements, to encourage partnerships in the fight against trade secret theft. Commenters noted that penalties should be levied against countries that repeatedly steal U.S. trade secrets. Trade sanctions or embargoes could penalize countries that refuse to play along, or those partner countries that continue to engage in the theft of trade secrets.
What’s the Obama administration’s view of these comments (or lack thereof)? No comment. A White House spokesman told Trade Secrets Watch: “As this is an ongoing review, we do not comment on the public submissions received in response to the Federal Register notice.”