Policy

Green Chemistry and Trade Secrets: California Leads Chemical Disclosure Movement, As Companies Wrestle with Options for Protection

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Earlier this year, we picked mandatory public disclosure laws as a trend to watch in 2014.  Developments in California seem to bear that out, and trade secrets owners will want to keep a close eye on the “green chemistry” movement and expanded public disclosure requirements for manufacturers of a wide range of consumer products.  Companies that make or sell products in California — ranging from electronics and household cleaners to children’s toys and cosmetics — will need to map out a plan that complies with the new requirements while at the same time protecting their valuable intellectual property, including trade secrets. READ MORE →

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 →

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 →

(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,
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Time for the White House to Step In? Patchwork State Fracking Regulations Will Spawn FOIA and Trade Secrets Lawsuits

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Revised post available here.

With a growing number of states demanding disclosure of its fracking recipes, the oil and gas industry is fighting to plug what it views as government-mandated leaks in its trade secrets pipeline.

Battles are brewing in state capitals and courts as the industry faces fourteen states (and counting) that now require disclosure of the chemicals they use for fracking (aka hydraulic fracturing), a liquid-based process of drilling and extracting oil and gas from shale rock below ground.  These regulations are intended to allow government agencies to evaluate the environmental and health impacts of fracking.  Some state agencies are mandating disclosure directly to the agency (California is considering this approach), while other agencies are taking a permissive approach and rely on information submitted to an industry-developed registry for fracking.

Once collected by a state agency, the receiving agency can generally disclose corporate fracking information to third parties.  These parties may include doctors in the case of a spill under California’s fracking bill, or any member of the public in response to state freedom of information act (FOIA) requests.  Environmental and public-health groups are advocating for a robust disclosure policy, while oil and gas companies argue that their fracking approaches are trade secrets and READ MORE →

The Real Lesson of Chinese Cyberhacking

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The Real Lesson of Chinese Cyberhacking

There’s been a lot of news lately about the Chinese military allegedly launching cyber attacks to steal U.S. trade secrets.  This has gotten people riled up, including the President of the United States, who issued a 5-point plan for protecting American trade secrets.  The White House called on the public to make suggestions for new federal legislation to combat this growing threat.  (Submissions were due April 22, 2013.)

This is a time of great opportunity to do something big to protect U.S. trade secrets.  Unfortunately, some proposed solutions aren’t taking advantage of this opportunity.  Some industry groups, for example, have suggested adopting new federal trade secret legislation that would not preempt state laws and only cover cases of “international misappropriation,” or only cover misappropriation by or for the benefit of foreign governments, companies, or individuals.

Respectfully, measures of this type don’t address the real issue and aren’t seizing the moment.  The real lesson of Chinese cyberhacking is not that China has hackers targeting America, but that U.S. companies’ trade secrets are READ MORE →