Congress Makes Great Move in Amending the Economic Espionage Act

Each year, trade secret theft costs American companies billions of dollars. In 1996, Congress passed the Economic Espionage Act (EEA), making it a federal crime for any person to misappropriate any company’s economically valuable information, also known as trade secret information. The purpose behind the EEA was to increase protection for a company’s “intangible assets” in a time when technology and the Internet make confidential information highly accessible to those who should not see it.

In an important move to increase the power of the EEA, the law was recently amended through the Theft of Trade Secrets Clarification Act of 2012, which was signed by President Obama on January 1, 2013, clarifying that the law also applies to individuals that “intend to use” a company’s trade secrets as well as those who actually “use” a company’s trade secrets for ill-gotten gain. This brings to light the consideration that the EEA, currently an exclusively criminal statute, should be amended yet again to include a civil right of action for trade secret theft. Such a provision would confer automatic federal-court jurisdiction to pursue claims based on misappropriation of trade secrets. Currently, any civil action for such theft must be brought in a state court pursuant to that state’s trade secret law, unless the claim involves parties in multiple jurisdictions (two or more) and the claim meets or exceeds $75,000, qualifying the case for removal to a federal court. In short, a civil right of action provides victims of trade secret theft access to enhanced remedies and additional avenues to pursue productive resolutions to their claims, instead of being forced to navigate through the waters of 50 different jurisdictions. More than 16 years after the EEA was passed, U.S. companies are still threatened by trade secret theft and economic espionage, and companies deserve additional vehicles for redress that can be offered through Federal civil remedies.

In the summer of 2012, the ball seemed to be rolling on creating this civil provision to the EEA when the Protecting American Trade Secrets Act of 2012 (PATSIA) (S.3389) was introduced in the U.S. Senate by Senator Kohl, a sponsor of the original EEA. Senator Kohl’s passion for this legislation was prevalent when he introduced the bill on the Senate floor, categorizing the bill as a simple and straightforward solution to the EEA lacking Federal civil remedies. The bill would provide companies with the most effective and efficient ways to hold their competitive edge in the global market, all while fighting trade secret theft and attempting to recoup their losses. PATSIA would permit only the most serious trade secret theft cases to come before the Federal courts and would prevent defendants from destroying any evidence through judge issued seizure orders. Unfortunately, the bill died in committee when the 112th Session of Congress ended in early in January 2013. PATSIA represented an important move forward that complemented already existing state trade secret law. We urge Senator Kohl and his co-sponsors to reintroduce the bill in the near term.