WASHINGTON – Business leaders from the pharmaceutical, aerospace, and steel manufacturing industries urged Congress Tuesday to take urgent action to combat trade secret theft and protect American jobs by passing the Defend Trade Secrets Act, legislation introduced by U.S. Senators Chris Coons (D-Del.) and Orrin Hatch (R-Utah) to empower companies to defend their trade secrets in federal court and recover stolen intellectual property before it is sold to competitors.

In testimony before the Senate Judiciary Subcommittee on Crime and Terrorism, representatives from Eli Lilly and Company, Boeing, and Marlin Steel Wire Products spoke about the tremendous burden of trade secret theft on small and large companies alike, and the benefits of having access to the federal courts under a uniform cause of action to defend their trade secret rights. All three witnesses praised the bipartisan Defend Trade Secrets Act for taking meaningful steps to help companies better protect their investments in innovation, as well as the thousands of jobs they support.

Pursuing trade theft cases in state courts results in “a whole lot more expense,” said Doug Norman, Vice President and General Patent Counsel for Eli Lilly, as well as “a whole lot more risk, because we may not be able to isolate and seize the stolen materials as quickly.”

Norman praised the Coons-Hatch legislation’s ex-parte provision, which would allow companies like Eli Lilly to act immediately to prevent former employees from selling valuable trade secrets to competitors.

“A federal cause of action, where we can go to a single court and institute the power of the federal court system to seize stolen materials, would be extraordinarily helpful in those situations,” Norman said.

“Stopping criminals from getting on a plane with our trade secrets and, thereby, preventing their disclosure, is indeed our highest priority,” said Peter Hoffman, Vice President of Intellectual Property Management at the Boeing Company, in testimony before the subcommittee. “And in those worst cases, where the secret is disclosed to a competitor and a company is seriously harmed, companies should be empowered to seek damages, so long as appropriate safeguards are in place to prevent abuse. We look forward to working with Senator Coons and Senator Hatch on this bill, and supporting your efforts to encourage the Congress to act quickly to pass this important legislation.” 

The Defend Trade Secrets Act would also bolster the ability of smaller manufacturers, like Baltimore-based Marlin Steel Wire Products, to prevent theft and recover losses.

“The Defend Trade Secrets Act is very well-crafted,” said Marlin Steel Wire Products President Drew Greenblatt. “Little companies can’t afford having lawyers in five different states on retainers trying to go after a bad actor.”

By providing companies with federal jurisdiction, “the Coons-Hatch bill would tremendously accelerate our ability to stop bad actors and get good results,” he said.

Theft of corporate trade secrets leads to the loss of an estimated $160 billion to $480 billion each year in the United States and puts U.S. jobs and innovation at risk. Although the Economic Espionage Act of 1996 made trade secret theft a crime, the Department of Justice brought only 25 trade secret theft cases last year. State-level civil trade secret laws alone have not been sufficient to stop interstate theft. Federal courts are better suited to working across state and national boundaries to facilitate discovery, serve defendants or witnesses, or prevent a party from leaving the country. Laws also vary state-to-state, making it difficult for U.S. companies to craft consistent policies.

The Defend Trade Secrets Act would:

  • Harmonize U.S. law by building on the Economic Espionage Act to create a uniform standard for trade secret misappropriation. Companies will be able to craft one set of nondisclosure policies secure in the knowledge that federal law will protect their trade secrets. 
  • Provide for injunctions and damages, to preserve evidence, prevent disclosure, and account for the economic harm to American companies whose trade secrets are stolen.
  • Be consistent with the approach taken to protecting other forms of intellectual property, such as patents, trademarks and copyrights — all of which are already covered by federal civil law.

Read more about the bill here: http://www.coons.senate.gov/newsroom/press-releases/senators-coons-hatch-introduce-bill-to-combat-theft-of-trade-secrets-and-protect-jobs

The full text of the bill can be downloaded as a PDF here: http://coons.senate.gov/download/defend-trade-secrets-act