Without question, US companies face a growing and daily threat from rival companies and foreign governments. Thieves operating in cyberspace and using sophisticated technologies can quickly steal and transfer massive quantities of sensitive data, often while remaining anonymous. According to a 2013 bipartisan commission report, US businesses lose approximately $300 billion annually as a result of this cross-border IP theft. The report notes that foreign sources have, in particular, targeted sensitive information and technology owned by US companies. The threat to US trade secrets is also on the rise due to the fact that many US companies have overseas operations that may, through the use of foreign servers, unknowingly be exposing valuable information concerning customers, internal standards, manufacturing, suppliers, production and sales. The total dollar impact of trade secret theft is difficult to quantity, given that many business are either unaware of—or reluctant to report—trade secret thefts.
Amid increasing concerns that US trade secrets are insufficiently protected, lawmakers have enacted a series of laws, starting with the Economic Espionage Act of 1996 (EEA). More recently, in May 2016, President Obama signed into law the Defend Trade Secrets Act (DTSA). Now it appears that Congress may be poised to support further law and policy efforts to enhance trade secret protection. In the party platform it unveiled in July 2016, the GOP identified IP theft as a national security issue, and called for “strong action by Congress and a new Republican president to enforce intellectual property laws against all infringers, whether foreign or domestic.”
In addition to potential legislative and/or policy action, we may see an increase in criminal enforcement efforts. In the new administration, the Department of Justice may pursue additional Section 1831 cases under the EEA. Whether, and to what extent, President-elect Trump’s nominee for US Attorney General, Senator Jeff Sessions of Alabama, follows this course of action remains to be seen.
During President-elect Trump's campaign, he signaled that his administration would “enforce stronger protections" against foreign "hackers and counterfeit goods" and take "swift, robust and unequivocal” action in response to such thefts. He also vowed to use every “lawful presidential power to remedy trade disputes if China does not stop stealing American trade secrets and engaging in other illegal activities, including the application of tariffs consistent with Sections 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.” President-elect Trump also characterized as “de facto intellectual property theft” China's policy of requiring US trading partners to transfer technology to Chinese competitors.
President-elect Trump’s activities outside the White House also indicate the value he places on commercialization and protection of IP. Federal court records show that President-elect Trump has been involved in half a dozen federal trademark lawsuits over the past ten years, and that the Trump organization has been even more active before the US Patent and Trademark Office (typically attempting to block registrations based on a claim of confusion). He also attempted to protect the disclosure of perceived trade secrets in the recently settled Trump University fraud cases.
President-elect Trump’s policies with respect to protecting trade secrets from theft or misappropriation remain to be seen as his administration and priorities take shape. Dentons will keep you apprised of legal and political developments as they unfold.