The Trade Secrets Vault

A blog of trade secrets news, verdicts, and resources
 

Ellen Chen Yeh was found not guilty on all counts relating to allegations of theft of trade secrets from Texas Instruments (U.S. v. Ellen Chen Yeh et al., 3:08-cr-00096-P, U.S. District Court for the Northern District of Texas).

Yeh left Texas Instruments in 2005. She was en route to a new job in China along with her family when a pre-flight search by the FBI turned up a flash drive containing multiple files and documents from Texas Instruments. The drive was seized by the FBI and Yeh continued on to China. She was charged in 2008 with three counts of knowingly stealing and misappropriating TI trade secrets.

After several months of hearings, Yeh’s trial began on March 3rd, 2014. Defense attorney Mick Mickelsen argued that the defendant had kept the digital materials for anticipated future employment with Texas Instruments. After a two-week trial in front of Federal Judge Jorge Solis, Ellen Chen Yeh was found not guilty on all counts. “This was a case of extreme misunderstanding. The defendant’s intentions were never to distribute or sell trade secrets of Texas Instruments in China,” said the defense attorney.

To read the complete news story from PR Web, click here.

Microsoft employee pleads guilty to stealing trade secrets

Former Microsoft employee Alex Kibkalo has pleaded guilty to theft of trade secrets.
Last month, Redmond accused the former worker of leaking early copies of Windows 8 to a French blogger in 2012.

The information in question included Windows 8 RT software updates, which were distributed only to manufacturing partners, as well as the Activation Server software development kit (SDK). Via a friend in Redmond, the Lebanon-based Kibkalo uploaded the documents to SkyDrive (now OneDrive) in August 2012, and provided the blogger with links.

Microsoft discovered it was Kibkalo leaking the data after it searched the Hotmail account of the French blogger. Redmond initially defended the move, but said later that it would change its policy surrounding email snooping.

Please click here to finish reading this article from PC Mag, written by By Stephanie Mlot

If You Have A Trade Secret, You Better Protect It

Mondaq reports:

Late last month, Judge Cornelius J. Moriarty of the Massachusetts Superior Court granted summary judgment for a defendant company and two individual defendants on a trade secret misappropriation claim because the plaintiff company did nothing to protect what it claimed were trade secrets. One element of a trade secret claim is that the plaintiff must demonstrate that it took sufficient actions to protect its trade secret from unauthorized disclosure. Among the factors the court considers is (1) whether the plaintiff had agreements with employees and others restricting disclosure, and (2) any security precautions to prevent unauthorized access to the trade secret. In this case, the plaintiff could produce no evidence that it had any policy to protect confidential information, and it never had any of the defendants sign a confidentiality agreement. In fact, certain information that the plaintiff claimed as trade secrets was freely available on the plaintiff's computers, and the plaintiff even publicly disclosed some of what it claimed were trade secrets on its websites.

So what's the lesson? If you have trade secrets or confidential information as part of your business, make sure you protect it. Make your employees, independent contractors, and vendors sign non-disclosure agreements if you will be disclosing confidential information to them, and restrict access to confidential information to those with a need to know it by using technological barriers to access, among other things. If you don't, your secrets might be exposed, and the legal system might not be able to help you.

Protecting Your Developments: Patent or Trade Secret

This topic was the favorite of UNH Law Prof. Karl Jorda who taught the "complimentariness" of the rights...

Biodiesel reports:

When you develop a new product, process or formulation, deciding how to protect this development can have long-lasting ramifications for you and your business. Two ways for protecting such developments are by patent protection and trade secret protection. Each option has advantages and disadvantages that must be weighed in determining which one is the better choice for a particular development. To understand which form of protection may be more appropriate in a given situation, it is best to understand what each one is and what are its advantages and disadvantages.

In general terms, a patent is a government grant of the right to exclude others from making, using, selling or importing the claimed invention. A patent is enforceable in the jurisdiction in which it is granted and expires after a predetermined time period. In the U.S., a patent is enforceable for 20 years from the filing date of the patent application. A patent can be viewed as a contract with the government. In order to obtain the government-granted exclusivity provided by the patent, an inventor must provide a detailed and enabling disclosure of the invention. Thus, once a patent is issued (or a patent application published), the inventor’s disclosure is publically available for all to see. There is no guarantee that a patent will be granted simply because an application has been filed. The claimed invention must meet all the requirements for patentability, including patentable subject matter, novelty and nonobviousness.

As defined by the Uniform Trade Secret Act, a trade secret is information, including a formula, pattern, compilation, program, device, method, technique or process that derives actual or potential independent economic value from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Unlike patents over which the federal government has exclusive authority, trade secret protection derives from state law.

Patent rights protect against all making and use of an invention whether copied, independently developed or reverse engineered and as such provide far more effective protection than trade secret protection can provide. Patent litigation can be expensive to defend against and can result in damages being tripled against a willful infringer. The cost of defending against a patent infringement suit and the chance of a substantial damages amount being awarded if unsuccessful deters many would-be infringers from ever attempting to compete with the patent holder.

Patents can be expensive to pursue and may not be granted if the claimed invention does not meet the requirements for patentability. Patents make public the details of how to make and use the protected invention, and, thus, provide a means for others to copy the invention when the patent expires.

Trade secret protection arises immediately upon taking the steps reasonably necessary to maintain secrecy and can extend indefinitely, unlike patents, which eventually expire. Trade secret protection can be far less expensive to implement and can keep would-be competitors from ever learning the details of the protected development.

Trade secret protection does not protect against independent development, reverse engineering, or copying of publically disclosed developments. Once a trade secret has become publically disclosed it is no longer protected; and recourse is available only against those who wrongfully disclosed or misappropriated the trade secret.

Inventions that have not been publically disclosed more than one year and are both novel and nonobvious are potential candidates for patent protection. In particular, those inventions that would be publically observable if used would be more difficult to protect as trade secrets, especially if they could be reverse engineered.

Certain types of information, articles and processes tend to be better candidates for trade secret protection than others. Developments that are not publically observable during normal use, nor are easily reversed engineered or likely to be independently developed are better candidates for trade secret protection than those that are. If time to implementation and initial cost are overriding factors, then trade secret protection may afford the more immediately effective alternative. If the development is such that its commercial utility has a limited life span, or its design can be easily ascertained in the course of its use, then patent protection may be the better alternative.

The most appropriate form of protection can be determined only after careful contemplation of all the technical and business considerations—and no form of protection is ideal in every respect.

Standard Reports:

A businessman in California has been convicted of selling stolen trade secrets to Chinese firms so they could develop a pigment used to whiten products.

US officials said the conviction of Walter Lian-Heen Liew, also known as Liu Yuanxuan, marked the first federal jury conviction on charges brought under the Economic Espionage Act of 1996.

Prosecutors said Liew paid former DuPont engineer Robert Maegerle to provide trade secrets to help China's state-owned Pangang Group develop the substance chloride-route titanium dioxide, which helps make white-tinted goods such as paper and plastic.

Maegerle and Liew's firm, USA Performance Technology Inc, were also convicted of stealing trade secrets from DuPont, among other charges.

After a seven-week trial, the men and the company were also found guilty of economic espionage, bankruptcy fraud, tax evasion and obstruction of justice.

Prosecutors said Liew sold the information for more than US$20 million (HK$156 million) to Pangang so its companies could develop large-scale production capability using the process in the mainland, including a planned factory in the industrial hub of Chongqing.

"Fighting economic espionage and trade secret theft is one of the top priorities of this office, and we will aggressively pursue anyone, anywhere, who attempts to steal valuable information from the United States," US Attorney Melinda Haag said.

Liew, 56, and Maegerle, 78, face a minimum of 25 years in prison for the two most serious charges. Pangang Group vice director Hou Shengdong was also charged but is on the run.

Winchester Sun reports:


David Lewis, 65, pleaded guilty in U.S. District Court in Lexington to conspiracy to commit theft of trade secrets for selling information about brake pad development from his employer, Brake Parts International, to a Canadian competitor.

According to court documents, Lewis worked for BPI in Winchester as a principal development engineer from 1998 through 2008. In 1999, he signed an invention and disclosure agreement in which he agreed not to disclose any of BPI’s confidential or proprietary information.

In September 2006, Lewis began corresponding with Robert Kahan, the executive vice president of Satisfied Brake Products. According to the plea agreement, Lewis was not satisfied with his employment at BPI and did not feel valued by his superiors. Consequently, Lewis agreed to become a paid consultant for Satisfied. Initially, the two met at a Cincinnati Motel in October 2006 and Kahan paid Lewis $8,000 in cash. Lewis said he was subsequently paid by check.

The two communicated by separate, specific email accounts to conceal their identities, through which Lewis sent trade information, including brake pad formulas and a BPI underlayer formula, on numerous occasions in 2006 and 2007.

According to the plea agreement, Lewis was terminated by BPI in 2008 and began working openly for Satisfied. Lewis also admitted to taking formulas he developed for BPI with him to Satisfied, even though BPI owned the formulas and the confidentiality agreement was still in place.

Lewis is scheduled to be sentenced July 7 in U.S. District Court in Lexington by Judge Joseph M. Hood. Lewis could receive up to 10 years in prison, a maximum fine of $250,000 and up to three years of supervised release.

E.Valley Tribune reports:

Without comment the Arizona House voted Thursday to update laws on theft to include trade secrets.

Current statutes make it illegal to take property that belongs to another. It also includes keeping property that was misdelivered, controlling property knowing it was stolen and obtaining services without paying. HB 2567 adds the theft of trade secrets to the list of what is a crime.

The statute specifically defines “trade secrets” to include formulas, programs, plans, drawings and similar items that have economic value because they are not generally known to the outside world. But it also requires that the owner of the trade secrets have taken “reasonable” efforts to maintain their secrecy.

HB 2567 heads to the Senate after a roll-call vote.

Mondaq reports:

Earlier this week, the Ninth Circuit approved a district court order from the Northern District of California imposing $5,000 in sanctions against a plaintiff's attorney for factual misrepresentations made in an underlying trade secret case lawsuit brought by a toy inventor.

According to the complaint, California toy designer Jason Heller wanted to get a price quote for a prototype of a robotic hamster toy he had designed. He entered into NDAs with two Hong Kong toy companies and handed over information about his hamster toy idea. Heller accepted the quote, and the companies built a prototype that Heller eventually pitched to Hasbro and Mattel. At the 2009 Dallas Toy Fair, Heller saw some Zhu Zhu Pets toy hamsters that allegedly had the same features and accessories as the toy described in the materials he gave to the Hong Kong companies. The alleged knock-off hamsters were being sold by defendant Cepia. In 2011, Heller filed suit against Cepia, alleging that it developed a line of toys based on trade secrets he gave to the two Hong Kong companies. On March 29, 2012, the court granted the parties' stipulated request and dismissed the complaint against Cepia with prejudice. After reviewing discovery in the case, Heller acknowledged in the stipulated request for dismissal that "he did not find any evidence that Cepia had any access to any of Mr. Heller's hamster toy ideas or information" and therefore was "satisfied that Cepia independently developed its toy hamsters and toy hamster accessories marketed under the Zhu Zhu Pets brand and is therefore voluntarily dismissing his lawsuit against Cepia."

The district court ordered Heller's attorney Robert C. Matz of Markman & Matz LLP to pay $5,000 in sanctions because two allegations in the complaint were not "grounded in fact." In particular, the district court found that there was no factual support for the allegations that: (1) sign-in sheets "appeared to confirm" that Cepia had visited the premises of a co-defendant and (2) Heller had confronted some of the defendants, who then "refused" to provide information about their relationship with Cepia.

Matz appealed, arguing in his appellate brief that "in hindsight, that his wording could have been better," but that he subjectively intended a letter he wrote to one of the manufacturers to constitute a method of "confront[ing]" them on the issue.

A three-judge panel at the Ninth Circuit sided with the lower court and affirmed its decision under Federal Rule of Civil Procedure 11, noting that even though the complaint wasn't completely baseless, "the presence of some supported allegations in a pleading does not necessarily shield from sanctions an attorney who also includes unsupported allegations." Addressing the amount of its sanction, the court said that "[s]uch a sanction is hefty, especially given that the district court did not conclude that the complaint was baseless, but the amount is not so unreasonable that it constitutes an abuse of discretion."

Confidentiality Obligation Enforced to Protect Trade Secrets

The Lawyer reports:

In the case of Personnel Hygiene Services Ltd & ors v Rentokil Initial UK Ltd (t/a Initial Medical Services) & anr [2014] EWCA Civ 29, 29 January 2014, the Court of Appeal held that a judge had been entitled to find that a duty of confidentiality, which was expressly provided for by a previous confidentiality agreement, continued during and after a subcontract was entered into even though the subcontract did not expressly police the use of confidential information. The judge's final injunction was upheld. This decision demonstrates that, if a party can establish that
information is truly confidential, then it is likely to benefit from wide protection.

Read the rest of the story

PNC Sues Ex-Exec, Morgan Stanley For Trade Secret Theft

PNC Financial Services Group Inc. sued a former executive and Morgan Stanley Inc. in Pennsylvania federal court Friday, alleging the ex-senior vice president conspired with the rival company to poach PNC workers, customers and trade secrets to unfairly compete, in breach of her employment agreement.

Pittsburgh-based PNC said Eileen Daly and Morgan Stanley schemed to coax other PNC employees to defect to Morgan Stanley, misappropriate its confidential business information and trade secrets, and unlawfully solicit its customers.

“PNC has suffered, and will continue to suffer, millions of dollars in damages, as well as the loss of customer relationships, customer goodwill and confidential business information,” the financial services corporation said in its complaint.

Daly is bound by employment and confidentiality agreements, PNC argues, which bar her from disclosing PNC’s sensitive business information or soliciting or doing business with current or former PNC customers and employees.

In spite of these agreements, Daly conspired with three other PNC employees, with the assistance of Morgan Stanley, to resign from PNC en masse, misappropriate PNC’s confidential information and divert PNC customers to Morgan Stanley, the suit says.

Days before her resignation, Daly tried to download confidential information concerning PNC’s customers, including confidential customer lists, but was blocked by internal security measures, PNC said.

Undeterred, Daly was seen taking photographs of her computer screen with her cellphone mere hours before her resignation, and PNC believes she also took 10 boxes of customer files from her office and is utilizing them to compete with PNC through Morgan Stanley, according to the suit.

Immediately following her resignation, Daly and other Morgan Stanley employees began contacting PNC customers using contact information only available by accessing PNC’s confidential information, including these customers’ private phone numbers, PNC claims.

“To date, Daly has succeeded in wrongfully transferring almost $250 million of customer assets, representing more than $1 million in annual fees for PNC, to Morgan Stanley,” the complaint states.

Morgan Stanley and Daly have also defamed PNC by using its highly confidential and proprietary information to make disparaging statements to current PNC customers regarding PNC’s fee structures and strategies, all for the purpose of convincing those customers to shift their business to Morgan Stanley, according to the suit.

Morgan Stanley did not immediately respond to a request for comment late Friday.

PNC is alleging breach of fiduciary and common law duties, breach of contract, tortious interference with contractual relations, misappropriation of trade secrets, conversion of corporate assets, commercial defamation, unfair competition and civil conspiracy.

Friday’s is at least the second trade secrets suit involving Morgan Stanley brought in the past several months. In October, Societe Generale SA sued a former commodities strategist and his wife, seeking to stop disclosure of trade secrets after the strategist emailed confidential and proprietary information to his wife in the months leading up to his taking a job with Morgan Stanley.

PNC is represented by Matthew F. Burger and Jordan M. Webster of Buchanan Ingersoll & Rooney PC.

Law 3 6 0 Reports:

A two-judge panel of the New Jersey Superior Court's Appellate Division sided with SAE, which filed suit in January 2010 against Avaya and Delta Products Corp. SAE accuses Avaya of violating a nondisclosure agreement attached to a contract between the companies by giving proprietary data about SAE's power supply units to Delta, SAE's competitor.

The panel affirmed a trial court's rejection of Avaya's motion to compel arbitration in a pointedly worded decision, saying Avaya intentionally delayed its assertion of a mandatory arbitration clause in the nondisclosure agreement in order to collect discovery from SAE while delaying its own discovery response by filing a protective order.

“Avaya did not assert its right to arbitration until after receiving extensive discovery from SAE and before its own discovery obligations were satisfied,” the opinion said. “And in the meantime, Avaya resorted to the court to obtain additional discovery and to adjudicate its right to a protective order, thereby delaying its own discovery response. It is therefore reasonable to assume Avaya's delay in filing its motion to compel arbitration was both deliberate and strategic.”

According to the opinion, SAE and Avaya began their business relationship around 2001, when Avaya began purchasing power supply units from SAE, as well as from other suppliers, including Delta. Avaya required that its power component suppliers comply with written specifications and make their parts compatible with parts supplied by other manufacturers, hence SAE's execution of a nondisclosure agreement to protect its trade secrets after handing them over to Avaya, the opinion said.

In March 2008, the opinion said, Avaya issued a request for quotation for its power supply needs to several vendors and according to SAE, Avaya selected Delta's bid, then provided Delta with SAE's proprietary information so Delta could build the parts to Avaya's specifications.

SAE first filed a federal suit in January 2010, then refiled a state court suit one year later, after the federal suit was dismissed on jurisdictional grounds. The suit included counts of breach of contract, unjust enrichment, promissory estoppel, breach of the covenant of good faith and fair dealing, fraud, negligent misrepresentation, tortious interference with contractual relations, tortious interference with prospective economic advantage, misappropriation of trade secrets and civil conspiracy.

Avaya filed its response to the suit in 2011 and discovery began, with SAE delivering Avaya around 50,000 documents in May 2012, but Avaya told the court it hadn't been provided enough information, and demanded supplemental discovery responses identifying the trade secrets at issue, the opinion said.

According to the opinion, Avaya didn't notify SAE that it wanted to arbitrate the breach of contract and misappropriation of trade secrets counts, pursuant to the nondisclosure agreement, until nearly three years after SAE first filed suit.

Avaya never raised the issue of the arbitration clause during the pleadings, the appeals court said, and told an incredulous trial judge it was not in possession of the nondisclosure agreement until after SAE provided the discovery documents, a claim the panel found specious.

“We find Avaya's proffered excuse for the long delay — not being in possession of the [nondisclosure agreements] until SAE provided them in discovery — highly implausible, as did the motion judge, since these agreements were the 'whole basis of the relationship' with SAE and were printed on Avaya's stationary,” the opinion said.

To let Avaya to compel arbitration would put SAE at a severe disadvantage, the opinion said, allowing Avaya to see sheafs of discovery documents without providing SAE with any of its own. The panel also said arbitration would be problematic because it would need to be conducted without Delta, which was named as a defendant but was not a party to the nondisclosure agreement.

Mondaq reports:

The draft has been formally adopted, and is now going through the Eurocratic motions, which means that it may well be in force by the end of this year. It has been prompted by the Commission's acknowledgment that the legal protection of trade secrets across the EU is "uneven" and "sub-optimal" (translation: shambolic), and that having 28 different systems of protecting confidential information is not exactly the best way of keeping up with the global competition.

If and when the draft directive matures into the laws of the various member states (it being the case that directives require transposition into domestic law) it could change the IP landscape. For, even though confidential business information is one of the most ubiquitous types of IPRs, the laws that govern it are (at least in the UK) distinctly cloudy. Unlike most categories of IPRs, it is not the subject of any specific legislation – instead, resource must be had to the common law, most of whose decided cases date from the pre-internet era. Furthermore, since English law refuses to classify the action for breach of confidence as a tort, it is less than clear what sort of legal species it is; indeed there is even uncertainty as to whether, strictly speaking, confidential information ranks as intellectual property at all.

So an injection of top-down legislative certainty, with the compliments of Brussels, might be no bad thing at all. And in this respect the draft directive gets back to basics, with (inter alia) no-nonsense definitions of what a "trade secret" is, who the "trade secrets holder" is, and how the acquisition, use and disclosure of trade secrets can be considered to be unlawful.

The directive (if and when it arrives) won't sweep away the existing law: it will still be possible to sue under the common law action for breach of confidence, and (if one has in place an NDA or an employment contract, for example) for breach of contract as well. But it will, or should, overlay these laws with legislative certainties, as well as taking a giant step towards harmonising the EU's fragmented and often conflicting confidentiality laws. And since every single business in this country - and in the rest of the EU - will inevitably own confidential information, that will be important.

Secret chemical inside Oreo cookie leaked and sold to China

Two men were convicted of stealing an American company's secret recipe for making a chemical used to whiten products from cars to the middle of Oreo cookies and selling it to a competitor controlled by the Chinese government.

The four-man, eight-woman federal jury found Robert Maegerle, 78, and Walter Liew, 56, guilty of economic espionage and each could face 15 years or more in prison and hundreds of thousands of dollars in fines.

Noting Liew's connections to China, U.S. District Judge Jeffrey White ordered him taken into custody immediately.

"He has received millions of dollars from the People's Republic of China that remains unaccounted for," White said. "That's a lot of money that could help someone flee."

Please click here to continue reading this article from ABC news.

Fracking case in Wyoming Remanded

By MEAD GRUVER Associated Press

Wyoming Supreme Court ruling Wednesday will give environmentalists another chance to argue in favor of public disclosure of the ingredients in the chemical products used in hydraulic fracturing in the state.

The high court sent their case back to a lower court on a technicality, but noted that Wyoming didn't offer enough evidence that the state oil and gas supervisor was correct to withhold the ingredient lists in response to requests for them. The lower court will need to review each piece of information sought on a case-by-case basis, the justices ruled, rather than generally uphold the supervisor's judgment.

"Neither this court nor the district court has a sufficient basis to determine whether he acted properly or not," the justices wrote.

Wyoming was the first state to require disclosure of fracking fluid ingredients to state regulators.

But Wednesday's ruling granting a rehearing under the state public records law doesn't necessarily open the way to victory for the Powder River Basin Resource Council, Wyoming Outdoor Council, Earthworks and Center for Effective Government, however. The lower court judge who will rehear the case ruled previously that the lists are protected trade secrets under the justices' preferred definition of a trade secret.

"We will continue the fight in the trial court to ensure that the identity of fracking chemicals — which threaten the water supplies that communities depend upon — cannot be kept secret from the public," said an attorney for the groups, Katherine O'Brien, in a statement.

Wyoming's rules on disclosing fracking fluid ingredients are well-crafted and have been a model for other states, Gov. Matt Mead said in a statement.

"A value of having state rules is that we can be nimble to make changes to the rules or to their implementation if such action is deemed necessary," he said.

Oil and gas developers employ hydraulic fracturing to boost production. The technique pumps water, fine sand and chemicals into wells to fracture open oil- and gas-bearing rock deposits.

The process has been controversial amid concern that fracking gone wrong could taint groundwater with hydrocarbons or fracking fluids containing toxic substances. The industry uses a variety of specially formulated fluids to facilitate fracking.

To read the complete article by ABC News, please click here.

According to prosecutors at a San Francisco court, California native Walter Liew stole trade secrets of chemical company DuPont Co and gave them to a company in China.

Bloomberg said Liew, who emigrated to the US in 1980, has been formally charged with trade secret theft, economic espionage and conspiracy. Liew is among the over 20 people who had been filed espionage-related charges by the US in recent years. The White House under President Barack Obama said that Chinese spy agencies have launched an industrial espionage campaign meant to obtain US technology secrets for its biotechnology, telecommunications, clean energy and nanotechnology industries.

Assistant US Attorney Peter Axelrod said in his closing arguments after the five-week trial that Liew turned over a DuPont secret technology which involves the manufacturing of titanium dioxide to Pangang Group Co. Bloomberg said the titanium dioxide is the chemical term for the white pigment that is being used in plastics, paint and paper. Liew was reportedly urged by then secretary general of China Luo Gan to obtain trade secrets beneficial to the mainland. Axelrod said that when Liew and an ex-DuPont engineer were found out in 2001, neither didn't come clean about it.

Please click here to read more from the Lawyer Herald.

The Sacramento Bee

NEW YORK and WASHINGTON, Feb. 25, 2014 -- /PRNewswire/ -- Estimates of trade secret theft range from one to three percent of the Gross Domestic Product (GDP) of the United States and other advanced industrial economies, according to a new report launched today by PwC US and the Center for Responsible Enterprise and Trade (CREATe.org): Economic Impact of Trade Secret Theft: A Framework for Companies to Safeguard Trade Secrets and Mitigate Potential Threats.

Winter 2014 federal trade secret legislation update

Lexology Reports:

Several bills under consideration in the 113th Congress would establish or significantly amend certain federal statutes related to the protection, enforcement, and exploitation of trade secrets. Some legislation aims to establish a private right of action for trade secret theft under federal law or to prevent or deter trade secret theft through cyberattacks.

Trade Secrets

Recent developments in U.S. federal trade secret law spring from the Economic Espionage Act of 1996 (EEA). While the EEA currently only provides for criminal prosecution, the Future of American Innovation and Research Act (S. 1770) (FAIR Act) would allow trade secret owners to bring civil actions for trade secret misappropriation against foreign defendants (or defendants located in the U.S. when the theft was intended to benefit a foreign person or entity). Designed primarily to target trade secret theft by or in favor of foreign actors or entities, under the FAIR Act, plaintiffs may seek damages, restitution, injunctive relief, punitive damages, and attorney’s fees, and courts may seize items used to facilitate trade secret theft (i.e., cell phones or computers). A similar version of the foregoing bill, the Private Right of Action Against Theft of Trade Secrets Act of 2013 (H.R. 2466) creates a private cause of action for trade secret theft against defendants located in the U.S. and further clarifies that claims for reverse engineering trade secrets are not actionable. The private right of action under these bills would presumably help companies that face trade secret theft involving international participants by facilitating multi-jurisdictional litigation involving witnesses and critical evidence located in another state or country. Under either bill, a private right of action would also allow companies to assert greater intellectual property rights over proprietary data, such as consumer data that has become a more important intangible asset to many businesses.

Several other pending bills addressing trade secret protection were introduced to prevent and deter trade secret theft resulting from cyber invasions or cyberattacks. These bills are largely reactionary to the recent wave of cyber intrusions, as best illustrated by a 2013 report that the Chinese military had hacked into the computers of many U.S. businesses in order to steal trade secrets. With respect to these bills, the Cyber Economic Espionage Accountability Act (H.R. 2281) (CEEAA) would permit the President of the U.S. to identify and penalize foreign officials that commit or aid cyberspying and trade secret theft through asset freezes, travel bans, visa revocations, and other punitive measures. Introduced only a month after the CEEAA in May of 2013, the Deter Cyber Theft Act (S. 884) would further require a watch list of offending nations to be created, and also mandate the President to direct U.S. Customs and Border Protection to bar imports from foreign countries named to a watch list.

Finally, several other trade secret protection bills look to strengthen trade secret protection under federal law by allowing the sharing of cyber threat information and by increasing or enhancing penalties for cyber criminals. For example, the Strengthening and Enhancing Cybersecurity by Using Research, Education, Information and Technology Act (H.R. 1468) creates a limited exemption from antitrust laws for the sharing of cyber threat information between private businesses, and aims to amend certain provisions of the Computer Fraud and Abuse Act to include criminal penalties for aggravated damage to certain critical infrastructure computers (e.g., those that control chemicals or electricity). Along similar lines, the Cyber Intelligence Sharing and Protection Act (H.R. 624) (CISPA) is designed to permit information sharing about cybersecurity threats among government agencies and private companies. CISPA would allow the federal government to use cyber threat information obtained from private companies for certain purposes including, without limitation, to investigate and prosecute cybersecurity crimes. In light of recent scrutiny over government initiatives to obtain and review data from companies, it is worth noting that CISPA has already drawn substantial criticism from privacy advocates and the White House and could have difficulty advancing.