Defend Trade Secrets Act ready for markup in Senate Judiciary Committee

By Gene Quinn
December 2, 2015

Senator Chris Coons (D-DE), one of the authors of the Defend Trade Secrets Act.

Senator Chris Coons (D-DE), one of the authors of the Defend Trade Secrets Act.

Earlier today the Senate Judiciary Committee held a hearing on the Defend Trade Secrets Act, which is authored by U.S. Senators Chris Coons (D-DE) and Orrin Hatch (R-UT). This is an important issue for Congress because trade secret theft puts American jobs at risk and threatens incentives for continued investment in research and development in the United States. Currently, civil trade secret laws can and do vary state-to-state, and while the differences may not be substantively large it is truly odd that in a global economy the United States has left trade secret law to the States to individually regulate. It is long since time for Congress to act.

One of the largest problems is the reality that trade secrets are extremely fragile. The current fragmented jurisdictional structure governing trade secret disputes can at times make it difficult to provide trade secret owners with the necessary immediate remedies required to stop a trade secret from being lost forever. The lack of a streamlined process that crosses state borders is of particular concern given the reality that once a trade secret is no longer a secret the right is lost forever. In a world where even the smallest of businesses can do business internationally the lack of a unified set of trade secret laws applicable to the entire U.S. is mind boggling.

At the hearing today, testimony from representatives from a variety of industries, including Delaware-based DuPont, explained the need for a federal private right-of-action to give companies the ability to protect their trade secrets in federal court.

“As an innovator, DuPont depends on intellectual property protection—including trade secrets,” said Karen Cochran, Associate General Counsel and Chief IP Counsel, DuPont in testimony to the committee. “Realizing the full potential of our innovation often includes knowledge-building that can span decades. This work generates a range of intellectual property from patents to trade secrets. DuPont recently defended the trade secrets for one of our well-known products, Kevlar®. This experience brought about our realization of the importance of S. 1890 and updating trade secret protection and remedies.”

The Defend Trade Secrets Act is currently backed by at least nine members of the Senate Judiciary Committee, including: Senators Dick Durbin (D-IL), Jeff Flake (R-AZ), Thom Tillis (R-NC), Richard Blumenthal (D-CT), Amy Klobuchar (D-MN), David Perdue (R-GA), and Jeff Sessions (R-AL).

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The bill is also supported by a broad industry coalition that includes Adobe, AdvaMed, the Alliance of Automobile Manufacturers, the Association of Global Automakers, Inc., Biotechnology Industry Organization (BIO), The Boeing Company, Boston Scientific, BSA | The Software Alliance (BSA), Caterpillar Inc., Corning Incorporated, Eli Lilly and Company, General Electric, Honda, IBM, Illinois Tool Works Inc., Intel, The Intellectual Property Owners Association (IPO), International Fragrance Association, North America, Johnson & Johnson, Medtronic, Micron, National Alliance for Jobs and Innovation (NAJI), National Association of Manufacturers (NAM), NIKE, Pfizer, Philips, The Procter & Gamble Company, SAS, Siemens Corporation, Software & Information Industry Association (SIIA), U.S. Chamber of Commerce, and United Technologies Corporation.

In a letter dated December 2, 2015, sent to Senators Hatch, Coons and Flake, the aforementioned industry coalition wrote:

Trade secrets are an essential form of intellectual property. Trade secrets include information as broad-ranging as manufacturing processes, product development, industrial techniques, formulas, and customer lists. The protection of this form of intellectual property is critical to driving the innovation and creativity at the heart of the American economy. Companies in America, however, are increasingly the targets of sophisticated efforts to steal proprietary information, harming our global competitiveness.

Existing state trade secret laws are inadequate to address the interstate and international nature of trade secret theft today. Federal law protects trade secrets through the Economic Espionage Act of 1996 (“EEA”), which provides criminal sanctions for trade secret misappropriation. While the EEA is a critical tool for law enforcement to protect the clear theft of our intellectual property, U.S. trade secret owners also need access to a federal civil remedy and the full spectrum of legal options available to owners of other forms of intellectual property, such as patents, trademarks, and copyrights.

The Defend Trade Secrets Act will create a federal remedy that will provide a consistent, harmonized legal framework and help avoid the commercial injury and loss of employment that can occur when trade secrets are stolen. We are proud to support it.

With such widespread, bipartisan committee support and backing of key industry groups, the bill seems poised to be voted out of the Judiciary Committee and considered on the Senate floor.

“To safeguard American ingenuity and give companies the protections they deserve, Congress should act now to pass the Defend Trade Secrets Act, which Senator Coons and I authored earlier this year,” said Senator Hatch. “Not only has our bill attracted overwhelming bipartisan support in both chambers of Congress; it has also garnered endorsements from a wide-array of industry stakeholders who know firsthand the economic losses caused by trade secret theft.  Both Republicans and Democrats can agree that this bill is a win for American property rights and innovation. Why wouldn’t we move this bill now?”

“Today’s hearing demonstrated that we need this bill now more than ever as more and more American companies are losing jobs and revenue because they lack the ability to defend their trade secrets under federal civil law,” said Senator Coons. “Companies in Delaware and across the country who drive innovation and economic growth deserve the same legal protections that other forms of critical intellectual property enjoy. I urge my colleagues to listen to the testimony from today if they have any doubt of the need for this bill that has strong support across a diverse array of industries, and I’m determined to work with Senator Hatch to see this bill across the finish line.”

For more on this topic please see A fear of trade secret trolls is completely unfounded.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 6 Comments comments.

  1. Joren De Wachter December 2, 2015 2:04 pm

    Of course, no mention of Orly Lobel’s book “talent wants to be free”, which convincingly destroys the myth that strong trade secrets are good for the economy. Extensive empirical evidence indicates that strong trade secrets are closely correlated to lower economic growth, less innovation and fewer jobs.

    Empirically based policies? Not so much in the IP field.
    But why let facts get in the way of a good monopoly?

  2. Edward Heller December 3, 2015 7:05 am

    Gene, what is your view on the “inevitable use and disclosure” doctrine?

  3. Gene Quinn December 3, 2015 9:45 am

    Edward-

    If what you are asking about is the possibility that courts will issue injunctions preventing employees from taking jobs I think that is extremely unlikely. The bill has an explicit bias in the language to tell judges that they should not issue such injunctions. There is then a carve out akin to the 4 factor injunction test, but which incorporates more considerations. Only in the most extreme situation would it seem possible that an injunction could ever issue against an employee.

    I certainly don’t think we want a law that gives district court judges no discretion because I’m sure we can all think of situations when an injunction would be appropriate, although the facts would be truly egregious. Further, there is already a long and well established history of case law that strongly discourages employee movement.

    -Gene

  4. Edward Heller December 3, 2015 3:35 pm

    Gene, I don’t think you really meant this:

    “Further, there is already a long and well established history of case law that strongly discourages employee movement. ”

    My view: targeting of an employee to obtain access to arguably trade secret information of a competitor is wrong and should be enjoined. However, employees should be able to freely move otherwise.

  5. Gene Quinn December 3, 2015 3:59 pm

    Edward-

    You are right. There is a critical word missing there. I meant to say that is a well established history that strongly discourages ENJOINING employee movement.

    Like you, I think that injunctions have to be an option, but the presumption should be that employees have a right to move.

    In a recent webinar I pointed out that there is a lot of concern over this aspect of the bill, perhaps because TV and movies sensationalize technological secrets. How many plots have you seen where it is just accepted that if X were to get there hands on Y they would jump 10 or 20 years ahead in terms of development overnight? In the real world those situations are few and far between, but an injunction in would be perfectly appropriate if not absolutely required.

    -Gene

  6. Night Writer December 4, 2015 10:46 am

    I can just imagine those employment contracts and how they will leverage this to make it very hard for a lowly employee to change to a competitor (note that in technology it is hard to leave your company and not go work for a competitor because your skill set has to be current.)

    The stronger the trade secret law the greater the chance that companies just stop using the patent system and shut down completely the flow of information.