Legislation

GIVE AND TAKE: Lofgren’s Twin Trade Secret Bills Would Curtail Actions Under One Law, Expand Them Under Another

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When Rep. Zoe Lofgren, the Silicon Valley Democrat, introduced a pair of bills last month on trade secret misappropriation, we puzzled over her purpose.  Was this a response to the White House’s call for improved federal legislation to protect U.S. trade secrets?  Did the measures mark the start of a comprehensive federal civil “Trade Secrets Act” that would put trade secrets on par with other federally protected intellectual property such as patents, trademarks, and copyrights?

Trade Secrets Watch decided to investigate and tapped our congressional sources for the back story.  Turns out our musings were wrong.

First, a quick backgrounder on federal trade secret protection (and lack thereof): The federal government has declined to go all-in on protecting U.S. trade secrets, leaving this area primarily governed by state law.  When it comes to trade secrets, federal law consists of a patchwork of acts that leave yawning gaps in legal protection.  For example, the federal Economic Espionage Act, known as the EEA, prohibits trade secret theft but is solely a criminal law — it doesn’t provide for a federal civil cause of action (i.e., a right allowing private parties to sue).  And the Computer Fraud and Abuse Act, known as the CFAA, only covers certain types of thefts involving unauthorized access to computers.  It provides for criminal prosecution and grants a victimized company the right to sue.  But in a case last year (United States v. Nosal), the Ninth Circuit U.S. Court of Appeals interpreted the CFAA narrowly, finding that it was primarily intended to curtail hacking and that it does not bar employees from stealing trade secrets from their employers’ computers in more run-of-the-mill cases of trade secret theft.  READ MORE →

BILL BANDWAGON: Senators Draft Measure to Expand the Economic Espionage Act

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Yet another federal trade secrets bill may soon join the growing stack of legislation already under consideration in Congress.  This proposed bill would make modest changes to the Economic Espionage Act (“EEA”), which designates the theft of a trade secret a federal crime.

We emphasize that the “discussion draft” by Sens. Sheldon Whitehouse (D-R.I.) and Lindsey Graham (R-S.C.) is merely that—a draft bill that has not been introduced.  Still, the fact of the proposed bill, and the fact that the co-sponsors felt compelled to issue a press release about the measure while it is still on the drawing board, confirm that trade secret thieves (along with patent trolls) are the boogeymen du jour on Capitol Hill.

This proposed bill, if introduced and enacted, would incrementally extend the EEA’s application to foreign trade secret theft.  READ MORE →

Italian Renaissance: Birthplace of Invention Updates Its Trade Secrets Laws

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Italy, the country that enlightened the world with the Renaissance, has given us some of the greatest inventors and geniuses in history, from Leonardo da Vinci and Galieo Galilei to Georgio Armani.

But Italy is learning that a great invention is sometimes only as good as the trade secret laws that protect it.  Italy is modernizing its trade secret laws to bring them into greater conformity with international standards such as the TRIPS Agreement. A quick primer of Italy’s trade secret laws is available here.

White House Issues Another Strategy Plan to Protect U.S. Trade Secrets

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Last week, the White House unveiled its “2013 Intellectual Property Enforcement Coordinator Joint Strategic plan,” a roadmap to help the Department of Homeland Security combat intellectual property theft in the next three years.  This is the Administration’s second joint strategic plan on IP (its first plan issued in 2010), and its fourth statement this year on protecting U.S. trade secrets.

The latest plan reviews the progress made since 2010 and lays out 26 specific action items to strengthen IP protection, increase enforcement efforts, and encourage multi-national coordination.

The 88-page plan covers a lot of ground, taking on issues such as patent trolls and counterfeit drugs.  Trade Secrets Watch reviewed the plan’s implications for trade secret protection—especially in light of the White House’s recent efforts and requests for public comments earlier this year. READ MORE →

LEGISLATIVE UPDATE: Rep. Zoe Lofgren Proposes New Legislation, Including a Civil Cause of Action for Trade Secret Misappropriation

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We previously reported on the downpour of recent trade secret activity in Congress.  Last week, Congresswoman Zoe Lofgren (D-Cal.) added to the deluge by introducing two bills bearing on trade secret misappropriation: (1) the Private Right of Action Against Theft of Trade Secrets Act of 2013, a bill to amend the Economic Espionage Act to provide for a federal civil cause of action, and (2) Aaron’s Law Act of 2013, a bill to amend the Computer Fraud and Abuse Act in light of computer programmer Aaron Swartz’s suicide.

We’ve updated our primer on the recent trade secret-related legislation READ MORE →

Pols Gone Wild: Congress Discovers Trade Secret Theft and Cybersecurity are Problems; We Sort Through the Explosion of Legislation

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The revised post is available here.

Trade secret theft and cybersecurity are hot topics in Congress these days, spawning legislative initiatives left and right.  Amid this flurry of legislation, it’s hard to keep all the bills straight.  Trade Secrets Watch took a look at the legislation currently under review, and put together this primer:

Bill Sponsors What’s It About? Status
Cyber Economic Espionage Accountability Act Rep. Mike Rogers
(R-Mich.)Rep. Tim Ryan
(D-Ohio)
  • Introduced June 6, 2013, the bill broadly aims to secure the United States against cyber attacks sponsored by foreign governments.
  • The bill calls for the President to identify foreign government officials whom the President determines, “based on credible information,” are responsible for cyber theft of United States intellectual property.
  • The bill makes the identified persons ineligible to be admitted to the United States.
  • The bill directs the Secretary of State and Secretary of Homeland Security to revoke the visa of any such identified person.
  • The bill imposes financial sanctions, enabling the President to freeze property transactions by the identified individuals.
 Referred to the Foreign Affairs, Judiciary and Financial Services Committees.
Deter Cyber Theft Act Sen. Carl Levin
(D-Mich.)et al.
  • Introduced May 7, 2013, the bill would establish a “watch list” and “priority watch list” of countries that facilitate or engage in cyber theft of trade secrets from the United States.
  • As we previously reported, the bill would also require the President to direct U.S. Customs and Border Protection to bar imports from foreign countries on the watch list.
 Referred to the Committee on Finance.
Strengthening and Enhancing Cybersecurity by Using Research, Education, Information, and Technology Act (“SECURE IT”) Rep. Marsha Blackburn
(R-Tenn.)
  • Introduced April 10, 2013, SECURE IT seeks to, among other things, facilitate the sharing of cyber threat information and create new deterrents for cyber criminals.
  • For instance, the act creates a limited exemption from antitrust laws for the sharing of cyber threat information between private entities.  It further provides that an entity may disclose cyber threat information to any entity to assist with the investigation of threats to cybersecurity.  (This portion of the bill might face the same opposition as CISPA — see below.)
  • SECURE IT further requires that federal agencies be informed of significant cyber incidents involving their federal information systems and that agencies adopt technologies to detect and remediate cyber intrusions.
  • The bill aims to amend certain provisions of the Computer Fraud and Abuse Act to include new criminal penalties for “aggravated damage” to certain “critical infrastructure” computers, such as those that control water supplies, electrical power delivery, and financial transactions.
 Referred to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations.
Cyber Intelligence Sharing and Protection Act (“CISPA”) Rep. Mike Rogers
(R-Mich.)et al.
  • First introduced in the House on November 30, 2011, and most recently re-introduced on February 13, 2013, the act aims to permit information sharing about possible cybersecurity threats among government agencies and private companies.
  • CISPA has divided the House and Senate and has faced opposition by privacy and civil liberties organizations.
 The bill passed the House and was referred to the Senate but has not shown signs of advancement.  We reported earlier that the Senate would not be taking up the bill and that President Obama threatened to veto the bill because of privacy concerns.

 

What trends can we discern from these bills?   READ MORE →

Chinese Translation: Protecting Trade Secrets in China Requires Knowing Complex Layers of Laws and Practices

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As President Obama and Chinese President  Xi Jinping prepare for a summit this week in Rancho Mirage, California, the rhetoric over China’s alleged plundering of American government and corporate secrets might lead you to think that the country is lawless when it comes to the theft of trade secrets inside its own borders.

You would be mistaken.  China has intricate layers of trade secret laws and government agencies that deal with them.  This body of law flows from its statutes, including its 20 year-old “Anti-Unfair Competition Law of China,” its regulations such as its “Certain Provisions on the Prohibition of Misappropriation of Trade Secrets,” and its courts.  What China lacks are formal discovery tools and effective remedies for misappropriation.

All of this can make China a complex place in which to operate for a company trying to protect its trade secrets.  Start getting up to speed with our primer on China’s trade secret laws, available here.

UPDATE: California Bill Requiring Fracking Chemical Disclosure Advances in Legislature

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California is one step closer to requiring energy companies to disclose to state regulators the chemicals they use in hydraulic fracturing, also known as “fracking.”

On Wednesday, the state Senate passed S.B. 4.  As we have reported previously, the bill requires, among other things, the disclosure to state regulators of potential trade secrets in the form of fracking fluid chemicals. The regulators may, in turn, disclose this information to first responders and health care professionals in the event of an emergency.  The information would not, however, be publicly accessible.  The bill contains stiff civil penalties for noncompliance.

As we discussed in our original post on this issue, California’s law adds to the uncertainty associated with patchwork fracking disclosure rules, particularly because California has significant coastal and inland shale deposits that will undoubtedly be a prime target for oil and gas companies.

The bill will now be considered by the state Assembly.  If that chamber passes the measure with no amendments, it then goes to Gov. Jerry Brown.  If the Assembly does amend it, the bill returns to the Senate.

(Practically) No Comment: White House Plea for Public Input on Trade Secret Theft Draws 13 Responses

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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. READ MORE →

Terror Tactics: Report Urges Government to Use Financial, Trade and Immigration Systems to Squeeze Theft of IP

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A new report on halting the theft of trade secrets and other intellectual property reads like a blueprint for fighting terrorism­—not surprising, given that it was co-authored by the nation’s former spy chief and a member of the 9/11 Commission.

On Wednesday, the Commission on the Theft of American Intellectual Property released its report detailing the scale and scope of the problem.  The Commission is an independent, bipartisan body made up of members from national security, foreign affairs, academia, politics and the private sector.  It is chaired by former director of national intelligence Dennis C. Blair and former U.S. Ambassador to China and ex-Utah Gov. Jon M. Huntsman Jr.  Its report is the product of an eleven-month study. 

The Commission’s report pulls no punches: it calls IP theft “one of the most pressing issues of economic and national security facing [the United States]” and singles out China as “the biggest IP offender in the world.”  Along with documenting patent, trademark, and copyright violations, the report dedicates a full chapter to trade secret theft.  Among its alarming findings:

  • In 2009, U.S. firms lost at least $1.1 billion from the misappropriation of trade secrets to China alone.  Russia is also an aggressive collector of sensitive U.S. economic information and technologies, especially in cyberspace.
  • In the past two years, an unprecedented number of cyberattacks have been perpetrated against major corporations, nonprofit institutions, and governments, with the majority of these attacks originating in China.  Our blog discussed the real lesson of Chinese cyberhacking earlier this month.
  • Cyberattacks are common, with some companies experiencing 72 successful attacks per week.  All sectors and all types of companies, large and small, are the targets of attacks.

Just as the 9/11 Commission reported the intelligence failings that led to the terrorist attacks,
READ MORE →