Several bills moving their way through the United States Congress would establish or substantially amend certain federal statutes pertaining to protecting, enforcing, and exploiting trade secrets and copyrights created in the United States. Some legislation is aimed at establishing a private right of action for trade secret theft under federal law and to prevent trade secret theft through cyber-attacks. Other legislation is designed to repeal or leverage certain compulsory copyright license fees or to modify copyright laws relating to public performance rights and anti-circumvention of technological access controls on consumer devices.
If signed into law these bills would have important implications for a wide range of interested parties, including performing artists, the entertainment industry, creators of copyrightable content, and any business that desires to exert greater control over its trade secrets and copyrights. Below is a summary of some of the more significant bills moving their way through Congress. While it is impossible to handicap the likelihood any of them will be enacted into law they each possess important provisions for American owners of trade secrets and copyrights. Today I will discuss the trade secret law developments.
Trade Secrets
Recent developments in federal trade secret law have their origin in the Economic Espionage Act of 1996 (“EEA”). While the EEA currently only provides for criminal prosecution, a bill moving through the U.S. Senate, the Future of American Innovation and Research Act (“FAIRA”), would allow trade secret owners to bring civil actions for trade secret misappropriation against foreign defendants, or defendants located in the U.S. when the misappropriation was intended to benefit foreign persons. Designed primarily to target trade secret theft by or on behalf of foreign actors, under FAIRA, plaintiffs may seek damages, restitution, injunctive relief, punitive damages, and attorney’s fees from defendants. Courts may order the seizure of property used to facilitate trade secret theft, including computers, cell phones and other electronic devices. A similar version of the Senate bill is moving through the U.S. House of Representative under the title the Private Right of Action Against Theft of Trade Secrets Act. The House bill creates a private cause of action for trade secret theft against defendants located in the U.S. and further clarifies that claims for reverse engineering trade secrets are not actionable. The private right of action under the Senate and House bills would aid companies that face trade secret misappropriation by international actors by making it easier to bring multi-jurisdictional litigation that involves witnesses and evidence located in multiple states or foreign countries. Under either bill, a private right of action would also allow companies to assert greater intellectual property rights over proprietary data, such as consumer data that has become a more important intangible asset to many businesses.
Several other pending bills addressing trade secret protection were introduced to prevent and deter trade secret theft resulting from cyber-attacks. These bills are largely reactions to the recent wave of foreign cyber-attacks, perhaps best illustrated by a 2013 report indicating the Chinese military had hacked into the computer systems of several prominent U.S. corporations to steal trade secrets. With respect to these bills, the Cyber Economic Espionage Accountability Act (“CEEAA”) would permit the President of the U.S. to identify and penalize foreign officials who commit or aid cyber espionage and trade secret theft by freezing the assets of the offenders, imposing travel bans, revoking visas, and imposing civil and criminal fines. Introduced only a month after the CEEAA in May of 2013, the Deter Cyber Theft Act (“DCTA”) would further require a watch list of offending nations to be created, and also mandate the President to direct U.S. Customs and Border Protection to bar imports from foreign countries named to a watch list.
Finally, several other trade secret bills look to strengthen trade secret protection under federal law by allowing the sharing of cyber threat information and by increasing or enhancing penalties for cyber criminals. For example, the House’s Strengthening and Enhancing Cybersecurity by Using Research, Education, Information and Technology Act creates a limited exemption from antitrust laws for the sharing of cyber threat information between private businesses, and would amend certain provisions of the Computer Fraud and Abuse Act to include criminal penalties for aggravated damage to certain critical infrastructure computers, like those that control chemical facilities or electrical power plants. Along similar lines, the Cyber Intelligence Sharing and Protection Act (“CISPA”) is designed to permit information sharing about cyber security threats among government agencies and private companies. CISPA would allow the federal government to use cyber threat information obtained from private companies for certain purposes like investigating and prosecuting cyber security crimes. In light of recent scrutiny over government initiatives to obtain and review data from companies, CISPA has already drawn substantial criticism from privacy advocates and the White House, which may make it difficult for this to move forward. Next week I will discuss the copyright developments.
Finkel Law Group, with offices in San Francisco and Walnut Creek, has extensive experience helping its clients navigate federal and state laws affecting their intellectual property rights, including trade secrets and copyrights. When you need intelligent, insightful, conscientious and cost-effective legal counsel to assist you in understanding new laws that may affect your company’s intellectual property rights, please contact us at (415) 252-9600, or info@finkellawgroup.com to speak with one of our attorneys about your matter.