Thursday, October 13, 2011, 10/13/2011 10:08:00 AM

U.S. Senators Herb Kohl and Christopher Coons Introduce EEA Amendment

By Todd

United States Senator Herb Kohl's office was thoughtful enough to provide us with a press release regarding proposed changes to the federal Economic Espionage Act that would permit a private right of action under federal law for trade secret misappropriation. Currently the EEA is only a criminal statute. Trade secrets are sometimes referred to as the "red-headed stepchild of intellectual property law." One of the reasons trade secrets are presently distinguishable from patent, trademark and copyright is that they are primarily governed as a matter of state law and, as most of you know, different states treat trade secrets and define them differently which sometimes leads to unpredictable outcomes for those seeking protections.

One of our good friends at this blog is David Almeling at the O'Melveny & Myers firm in San Francisco. Mr. Almeling has actively written regarding his proposal that trade secrets law be federalized and inconsistent state-by-state treatment be pre-empted. We are presently seeking his approval and that of the excellent patent blog, Patently-O, to re-post his recent take on this proposed amendment and his critique of the same.

Anyway, thanks to Senator Kohl's office for this press release - we welcome your comments and feedback:


Amendment will allow corporations to file legal grievances in federal court in cases of economic espionage

WASHINGTON – Today, U.S. Senators Herb Kohl and Christopher Coons (D-DE) introduced an amendment to the Currency Exchange Rate Oversight Reform Act aimed at protecting American trade secrets and innovation. The amendment gives companies the ability to go to federal court to stop misappropriation of trade secrets and allows them to seek compensation for losses due to economic espionage.

“The problem of economic espionage is not new, but it has grown and evolved as the information age has reached a point where trade secrets can circle the globe in the blink of an eye. U.S. corporations face intense competition at home and abroad. As much as 80% of the assets of today’s companies are intangible trade secrets. They must be able to protect their trade secrets to remain competitive and keep our economy strong,” Kohl said.
In 1996, Congress enacted Senator Kohl’s Economic Espionage Act, making it a federal crime to steal trade secrets. Revolutions in technology since then, however, have enabled different methods of trade secret theft and economic espionage which pose a threat to U.S. companies to the tune of billions of dollars a year. As a result, Kohl is the sponsor of the “Economic Espionage Penalty Enhancement Act of 2011” to increase maximum penalties for stealing a trade secret to benefit a foreign company.
To complement the criminal enforcement of economic espionage, this amendment would provide another way for companies to protect their trade secrets. Today, civil claims for trade secret theft must generally be brought in state court. This amendment enables victims of trade secret theft to seek injunctive relief, putting an immediate halt to trade secret misappropriation, and compensation for their losses in federal court. This amendment will help fill a gap in federal intellectual property law by providing legal protections for non-patentable, non-copyrightable innovations, on the condition that the owner of the innovation has taken reasonable measures to keep the innovation a secret.
There are many examples of economic espionage throughout our country. Last year, a Chinese national working for an American automobile manufacturer was convicted of stealing trade secrets for a Chinese competitor. His actions were estimated to cost the American company between $50 and $100 million.

In Wisconsin, a disgruntled employee of a company that manufactures aftermarket airplane parts was prosecuted under the economic espionage statute and sentenced to thirty months in prison for attempting to sell trade secrets to competitors. The trade secret – details and measurements of particular airplane parts – took years and hundreds of thousands of dollars for the manufacturer to create, test and gain Federal Aviation Administration (FAA) approval. Fortunately, the perpetrator was caught before he sold the trade secrets, but had he been successful the manufacturer would likely have been forced out of business.


Blogger Mike Marti said...

Good post! I was doing research online on Intellectual Property Law when I came across your very informative blog.

4:03 PM, December 07, 2011  

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