Earlier this week, senators from Delaware (Chris Coons, Democrat) and Utah (Orrin Hatch, Republican) introduced the Defend Trade Secrets Act which would create a private right of action for individuals and private companies to sue for theft of trade secrets in federal court. Despite failed attempts to introduce similar legislation in the past, both senators are confident that this bill will fair better than its predecessors; they are hoping that bipartisan support for the Defend Trade Secrets Act will carry it all the way to the President’s desk.
On July 29, 2014, Congressman Holding introduced a new piece of legislation, the Trade Secrets Protection Act (the “TSPA”). The TSPA is in response to growing cyber security threats and concerns, and is designed to increase the tools available for businesses to protect their trade secrets. While not preempting state law, the TSPA would create a federal civil remedy for trade secret misappropriation, according to the TSPA’s definition of misappropriation, which is modeled after the Uniform Trade Secret Act.
Law firms and Wall Street banks are discussing the sharing of more digital security information with each other in light of the recent cyber security breaches and of Obama’s executive order encouraging private companies to unite against hackers. Talks are under way to form a legal counterpart of the Financial Services Information Sharing and Analysis Center, a forum for the banking industry to share information about threats from hackers. The Center would anonymously provide the legal group information on security breaches seen in the banking industry.
While law firms’ vulnerability to cyber crimes is not a new phenomenon, such attacks are often unreported since law firms do not have the same stringent disclosure requirements as public companies. However, big banks are starting to require the law firms to provide documentation of security measures as a prerequisite to using the firm for legal representation.
Read more here.
The U.S. Government recently paid $45 million to Northrop Grumman Systems Corporations over trade secret misappropriation claims related to Northrop’s satellite technology.
In 2011, Northrop filed an administrative claim against the government seeking $332 million in lost profit damages, claiming that the government had stolen trade secret information that Northrop had developed during over 40 years of satellite work. Northrop claimed that the government downloaded a substantial amount of its intellectual property and disclosed it to other contractors working working with the government.
To read more about this case, see the full article at National Law Journal.
Congress is reigniting hope for the passage of federal legislation that will harmonize the protection of trade secrets across the United States. The Defend Trade Secrets Act (DTSA) has been reintroduced, in lengthier form than its predecessors, by a bipartisan group of Senate and House leaders. The new DTSA aims to harmonize trade secret laws across all states, provide for injunctions and damages to avoid economic harm to American companies without preventing employee mobility, and create remedies for trade secret misappropriation that are consistent with those awarded for other types of intellectual property. The bill enjoys strong support from large companies such as Procter & Gamble, Johnson & Johnson, Nike, General Electric, and The Boeing Company, Boston Software Alliance (BSA), among others. The bill’s bipartisan, bicameral and cross-industry support gives this bill an optimistic outlook.
Read more about the reintroduction of the DTSA in Senator Hatch’s Press Release.
See a full copy of the new DTSA Bill here.
The long-awaited IP Chapter of the Trans-Pacific Partnership trade agreement has been leaked in its fully-negotiated form. This chapter of the agreement has been negotiated in secret by twelve countries that make up 40% of the world’s gross domestic product. “The Chapter covers the agreed obligations and enforcement mechanisms for Copyright, Trademark, and Patent law for the Parties to the agreement.” Read the full chapter here.
On October 19, the New York Times reported that Chinese cyberattacks targeting American intellectual property and trade secrets has continued despite an agreement between President Obama and Chinese President Xi Jinping that the two would refrain from attacks “aimed at pilfering company intellectual property or trade secrets for commercial advantage.” Since the agreement, a number of attacks on American technology and pharmaceutical companies were traced back to China-affiliated actors. The Chinese government showed some progress towards stopping cyberattacks on the United States when it arrested a number of hackers who were said to have stolen secrets of American Companies, but the persistence of attacks is a large setback. Read more in the full New York Times article.
Last week, while the Defend Trade Secrets Act works its way through Congress, James Pooley, a well-respected attorney and former Deputy Director General of WIPO released a draft of his forthcoming George Mason Law Review article, The Myth of the Trade Secret Troll: Why We Need a Federal Civil Claim for Trade Secret Misappropriation. During this same week 42 professors sent a letter to Congress opposing the Defend Trade Secrets Act (DTSA), expressing strong concern that the DTSA “will not solve the problems identified by its sponsors” and instead would “likely [] create new problems that could adversely impact domestic innovation, increase the duration and cost of trade secret litigation, and ultimately negatively affect economic growth.” Professor Michael Risch, who signed the professors’ letter has expressed on his Patent & IP Blog that while the new DTSA is much improved from the former version, he still maintains concerns about the current version’s inevitable disclosure and seizure rules. As of August 29, 2015, “both the House and the Senate had referred the DTSA to their respective Committees on the Judiciary with bipartisan support.”
Yesterday, January 28, 2016 the Senate Judiciary Committee held a voice vote in favor of the passage of amended S. 1890, the Defend Trade Secrets Act of 2016 (“DTSA”). S. 1890 was introduced in July 2015 by Senators Orrin G. Hatch (R-UT), Chris Coons (D-DE), and Jeff Flake (R-AZ), and currently has 26 cosponsors in the Senate. As it stands today, trade secret law is patchwork and trade secret theft is protected through both the federal Economic Espionage Act and various state versions of the Uniform Trade Secrets Act. The DTSA would provide a federal civil cause of action for trade secret theft; thereby creating a uniform standard for individuals and companies to protect their trade secret rights.
The Committee’s new amendments include decreasing the statute of limitations from five to three years, and adding an immunity provision to protect individuals from criminal or civil liability for disclosing a trade secret if it is made in confidence to a government official, or to an attorney, for the purpose of reporting a violation of law.
It is not clear when the Committee will move the current version of the DTSA to a floor vote. The House’s version of the DTSA now has 107 cosponsors and it is unknown whether the House’s version will include the Senate’s amendments. Be sure to check back here for more updates.
On Wednesday, federal prosecutors indicted five employees of pharmaceutical powerhouse GlaxoSmithKline on charges of stealing trade secret about drugs to treat cancer and other diseases. Two of the employees were scientists who worked at GSK’s research facility in Pennsylvania. The two scientists released confidential data about GSK’s products to associates who were going to sell and market the trade secrets through a company called Renopharma.
Some of the documents included information regarding new monoclonal antibody technology that binds to receptors common in certain types of cancer cells. The product would eliminate or slow down the cancer. Such information would prove to be incredibly helpful to a start-up biopharmaceutical company, as the indictment mentioned. The New York Times reported that GSK was cooperating with authorities and that it believed that the breach had no “material impact.”
Check back here to stay informed as more develops with this case.