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  • Writer's pictureDenny Esford

Trade Secret Theft – How A New Federal Law Could Change the Game

When we think of IP law, we tend to think of the three usual suspects; trademarks, copyrights, and patents. Most people forget that trade secrets are intellectual property, too. A trade secret is information, including a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value from not being generally known/readily ascertainable, and is the subject of reasonable efforts to maintain secrecy. For example, the formula for Coca Cola is a trade secret, as is Colonel Sander’s KFC chicken recipe. These are protected so that competitors cannot steal and use them for themselves.

A big difference between trade secrets and the other forms of IP is that trade secrets are not federally protected. Instead, the Uniform Trade Secret Act was published in 1979 to provide a legal framework that the each of the states can adopt or alter. This leads to inconsistencies, however, as there is not one truly uniform set of rules. At least, there isn’t yet.

Recently, trade secret theft has been on the rise. The thieves have been relying on the fact that the laws differ in various states, and they steal information, quickly travel across state lines, and misappropriate the information there. This puts the victims at a disadvantage; because the state laws vary so much, they are unable to get relief through the courts fast enough to actually prevent harm.

In response to this rise in theft, the government is considering creating a federal civil remedy that will address trade secret misappropriation. The government is looking to amend the Economic Espionage Act of 1996 to do so, naming it the Defend Trade Secrets Act. Importantly, the Act will not preempt existing state law; instead, it will provide a faster, more predictable avenue for victims to get federal relief. Additionally, the backers of the Act argue, the federal courts are “better equipped to address the interstate and international nature of trade-secret theft than state courts.”

On January 28, the Senate Judiciary Committee approved the legislation that surrounds the Defend Trade Secrets Act. Next, the bill will go before the Senate, and later on to the President. If it goes through, many businesses big and small will be happy to learn they have a federal course of action against those who seek to steal and leak their trade secrets.

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