Try, Try Again - Recent Bill Renews Effort to Create Federal Private Right of Action for Trade Secret Theft

On April 29, 2014, Senators Chris Coons (D-Del.) and Orrin Hatch (R-Utah) introduced a bill which seeks to create a private right of action under federal law for theft of trade secrets. As noted in the press release accompanying the bill, the so-called “Defend Trade Secrets Act would empower companies to protect their trade secrets in federal court.”

The Defend Trade Secrets Act of 2014 echoes and amplifies a similar effort made last year, in which Representative Zoe Lofgren (D-Cal.) introduced a bill entitled the “Private Right of Action Against Theft of Trade Secrets Act of 2013.” We discussed that bill in this space last July.

Like the 2013 bill, the 2014 bill proposes amendments to the Economic Espionage Act, 18 U.S.C. § 1831 et seq. The 2014 bill, however, is more detailed and expansive in scope. The 2013 bill merely sought a two-paragraph amendment of 18 U.S.C. § 1832, adding text providing for a private right of action for compensatory damages and injunctive relief or other equitable relief, with a two-year statute of limitations.

The 2014 bill proposes an extensive amendment of 18 U.S.C. § 1836 which would not only create a private right of action, but also would:

• Allow for courts to issue civil ex parte orders (a) “for the preservation of evidence,” including by making a copy of an electronic storage medium that contains the trade secret, and (b) providing for the seizure of any property used to commit or facilitate the commission of a violation;
• Authorize courts to award (a) injunctive relief, (b) damages for actual loss or any unjust enrichment, (c) a reasonable royalty for a misappropriator’s unauthorized disclosure or use of a trade secret, (d) exemplary damages (up to treble the amount of compensatory damages); and/or (e) attorneys’ fees;
• Grant U.S. District Courts original jurisdiction of civil actions brought under the section;
• Establish a 5 year statute of limitations period; and
• Include definitions of “misappropriation” and “improper means” that largely track similar language in the model Uniform Trade Secret Act, which has been adopted in various forms in 48 states (with Massachusetts and New York being the two exceptions).

While there is strong support in the business community for the Defend Trade Secrets Act of 2014, only time will tell whether it actually will become the law of the land, and in what form. Nonetheless, for various reasons -- including high-profile trade secret thefts and prosecutions in the news, a desire to standardize the law on trade secrets, and a perception that the U.S. economy is vulnerable to trade secret thefts from overseas -- momentum does appear to be on the side of these efforts to create the elusive federal private right of action for trade secret theft.