Much attention, including here at Trade Secrets Watch, has been focused in recent weeks on the Defend Trade Secret Act (“DTSA”), which overwhelmingly passed both houses of Congress in April and was signed into law by President Obama on May 11th. The DTSA gives companies new tools for combatting alleged trade secret theft, including a direct path to federal court via the addition of a private right of action to the Economic Espionage Act (EEA) and the ability to apply for ex parte seizure orders to prevent propagation or dissemination of stolen trade secrets.

The Supreme Court’s recent amendments to the Federal Rules of Criminal Procedure also enable seizures of allegedly stolen trade secret information but have garnered less attention. Specifically, an amendment to Rule 41 that would authorize federal judges to issue warrants allowing law enforcement to utilize “remote access” to seize or copy electronic information related to an alleged crime, including theft of trade secrets. On April 28, the Court transmitted the amended rules to Congress, and they will become law on December 1 unless Congress rejects them.

Currently, under subsection (b), Rule 41 authorizes a magistrate judge to issue a warrant to search or seize a person or property in five circumstances. The amendment would add a sixth:

(6) a magistrate judge with authority in any district where activities related to a crime may have occurred has authority to issue a warrant to use remote access to search electronic storage media and to seize or copy electronically stored information located within or outside that district if:

(A) the district where the media or information is located has been concealed through technological means; or

(B) in an investigation of a violation of 18 U.S.C. § 1030(a)(5), the media are protected computers that have been damaged without authorization and are located in five or more districts.

According to the Advisory Committee’s report, the amendment is intended to apply in “two increasingly common situations” – addressed by subparts (A) and (B), respectively. Both situations arise when the government seeks to obtain electronically stored information by “sending surveillance software over the internet” but cannot pinpoint the precise location of the computer or computers it seeks to surveil.

The first situation, addressed by subpart (A), arises when the perpetrator of a crime uses anonymizing networks or services, such as Tor, to shield the IP address of a computer used in a crime or to prevent authorities from tracing the perpetrator’s digital footprints. The problem for the government under the current version of Rule 41 is that, except in a few specifically delineated circumstances, the rule generally does not allow a judge to authorize a warrant outside of his or her district. Thus, if investigators cannot pinpoint the location of a computer involved in a crime because the perpetrator has used an anonymizing service, they face an uphill battle to obtain a warrant to digitally surveil a suspect’s computer.

In one case cited by the Advisory Committee, In re Warrant to Search a Target Computer at Premises Unknown, 958 F. Supp. 2d 753 (S.D. Tex. 2013), the judge denied a government request to surreptitiously install data extraction software on the suspects’ computer because the government could not provide the location of the computer. While that case involved an identity theft and bank fraud investigation, and the stated purpose of the amendment is to aid investigations like this one or others involving child pornography, the amended rule could also impact cases involving the alleged theft of trade secrets.

The EEA makes theft of trade secrets in certain circumstances a federal crime. So, if a suspected trade secret thief uses anonymizing software to cover his or her tracks, the amended Rule 41 could allow a judge to authorize a warrant for the government to use remote surveillance to obtain evidence, so long as the alleged theft “may have occurred” in the judge’s district.

There may, in fact, be some interplay in such a circumstance between the amended Rule 41 and ex parte seizure process created by the DTSA. In applying for a DTSA ex parte seizure order, a company victimized by digital theft of its trade secrets must only be able to identify the location of the matter to be seized “to the extent reasonable under the circumstances.” However, while the company may be able to obtain the seizure order, if it does not know the location of the stolen data (or even the location of the alleged culprit) it will have difficulty enforcing the order. In those cases, attempting to convince the government to pursue a criminal action in order to bring to bear the government’s resources to track down the stolen trade secrets – in combination with the amended Rule 41 – might be an option. Of course, the government’s resources are limited as well and such an option may not be feasible in time-sensitive situations. Moreover, where the government is willing to take on the matter, the trade secret owner may have to relinquish sole control over the prosecution and resolution of the misappropriation.

The second situation addressed in subpart (B) of amended rule is less likely involve trade secrets. It arises in cases involving so-called botnet attacks, where the perpetrator secretly takes control of multiple computers and uses the network to send spam or other malicious email, launch distributed denial-of-service attacks, or engage in other digital mischief. While also a powerful tool for the government, subpart (B) has less potential to impact areas outside of this specific situation than subpart (A).

Given that at least one Congressman has already announced opposition to the amendment, and in light of the heightened public interest in government surveillance, the amended Rule 41 is likely to come under greater scrutiny than prior amendments. Among the many concerns that critics have raised are that the rule could undermine Fourth Amendment protections, could violate international law and sovereignty principles by allowing searches outside the United States, and exceeds the authority granted to the Supreme Court under the Rules Enabling Act.