On November 21, Senator Jeff Flake (R-Ariz.) sponsored S. 1770, titled “Future of American Innovation and Research Act of 2013.” The bill, which has been referred to the Senate Judiciary, would allow federal civil suits against a foreign person, broadly defined to mean any legal or commercial entity, that “misappropriates, threatens to misappropriate, or conspires to misappropriate” a trade secret. The bill would extend U.S. District Court jurisdiction to entities “located outside the territorial jurisdiction of the United States” or acting “on behalf of, or for the benefit of” an entity located outside the United States. The offending conduct could occur outside the United States “if the conduct, either by itself or in combination with conduct within the territorial jurisdiction of the United States, causes or is reasonably anticipated to cause an injury – (1) within the territorial jurisdiction of the United States; or (2) to a United States [entity].” Remedies would include, among others, appropriate injunctive relief, payment of a reasonable royalty and damages for actual loss and any unjust enrichment. If passed, the legislation would harmonize the jurisdiction of the U.S. District Courts to hear such cases with that of Section 337 investigations before the Commission, which has in rem jurisdiction, in that personal jurisdiction over foreign entities would not be at issue. As previously reported in King & Spalding’s January 24, 2013 Client Alert, titled “Trade Secret Owners Flock to the International Trade Commission to Combat Overseas Misappropriation,” the Commission has seen a spike in investigations related to misappropriation of trade secrets since the Federal Circuit’s decision in TianRui v. ITC, 661 F.3d 1322 (Fed. Cir. 2011), affirming that Section 337 applies to misappropriation where the unfair act occurs exclusively overseas.
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Proposed bill permits federal civil suits against foreign entities that misappropriate trade secrets
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