In recent months, two bipartisan bills have been introduced in Congress providing for a Federal civil remedy for trade secret misappropriation — the Defend Trade Secrets Act , introduced in the Senate in April, and the Trade Secrets Protection Act, introduced in the House in July.   These companion bills are substantively similar in that they both amend the Economic Espionage Act of 1996 to establish a private right of action for a trade secret violation.  So far, the House bill is moving faster, having been approved on September 17, 2014, by the House Judiciary Committee and presumably moving toward a full House vote in the near future (or at least that’s what I learned on School House Rock).

The significance of these bills is that they finally extend Federal civil protection and regulation to trade secrets, currently the only category of intellectual property not so covered (copyrights, trademarks, and patents already have Federal protection).  The practical effect of these bills, if passed, will not be as game-changing as the casual observer might think, however.   The Uniform Trade Secrets Act (the “UTSA”) was first published in 1979, amended in 1985, and has been adopted by 47 states in some form, so civil remedies currently exist for trade secret theft and are similar to that offered in these two Federal bills.  Moreover, trade secret claims arising under state law often wind up in Federal Court based on diversity jurisdiction, so the access to Federal Courts is not as big of a deal as the bill sponsors might make it out to be.

Despite the similarities to the existing body of state statutes, however, the new bills, if passed, would certainly provide a new, improved hammer with which companies can pound unfair competitors and deceitful former employees. Some advantages of the proposed bills over the current state statutes based on the UTSA include the following:

  • Strong statement that trade secret protection is an important U.S. public policy;
  • Uniformity in trade secret law across the country;
  • Direct access to Federal Courts, regardless of the location of the parties or amount in controversy;
  • Longer statute of limitations;
  • Increased recoverable damages; and
  • Procedures for ex parte seizure of evidence.

BURR POINT: Rare bipartisan support, similar bills in both the House and Senate, and a quick and favorable reporting out of the House Judiciary point to Federal trade secrets legislation being something that this hamstrung Congress might actually be able to pass.