October 23, 2018

Administration Announces Strategy on Mitigating the Theft of Trade Secrets

Over the past year I’ve posted a number of blogs about trade secrets, economic espionage and what the government is doing to address this issue. In particular, I’ve highlighted the “China” connection and what companies should be doing in response. The government has finally begun to take notice.

The government released today a report entitled “Administration Strategy on Mitigating the Theft of U.S. Trade Secrets,” The report was a collaborative effort of many branches and agencies of the government including DOJ, Commerce, Defense, Homeland Security, Treasury, State and the Office of National Intelligence and the Office of the U.S. Trade Representative. The report contains 5 action items: (1) focus diplomatic efforts to protect trade secrets overseas; (2) promote voluntary best practices by private industry to protect trade secrets; (3) enhance domestic law enforcement operations; (4) improve domestic legislation; and (5) public awareness and stakeholder outreach.In some respects, the paper’s action items are simply old wine in a new bottle and repeat many of the same claims and statements that the government has been making since the enactment of the EEA in 1996. Every three or four years, the government has announced a new initiative in this area, and, yet, the number of indictments under the EEA has not increased. The paper notes that since 2010, the FBI has increased the number of trade secret theft investigations by 29 percent. While this may be true, it has yet to lead to an increase in the number of indictments over that period as compared to the previous two-year period. It may be too early to tell, however, since theft of trade secret investigations can be a very lengthy process especially if a foreign entity is involved.

The report does contain a number of recommendations that if actually carried out could improve the protection of trade secrets. In particular, the report indicates that the government will help facilitate efforts by organizations and companies to develop best practices to protect trade secrets. In addition, according to the report, the administration will conduct education and outreach efforts to increase the public’s awareness of the detrimental effects of misappropriation of theft of trade secrets on the U.S. economy in general.

With regard to domestic legislation, the paper highlights the two 2012 amendments to the EEA which closed a loophole that led to the Second Circuit overturning the conviction of a former Goldman Sachs programmer and increased criminal penalties for economic espionage and directed the Sentencing Commission to consider increasing offense levels for trade secret crimes. Unfortunately, the paper did not recommend the enactment of a civil trade secrets act, but did indicate that the Intellectual Property Enforcement Coordinator will initiate and coordinate a process to determine if legislative changes are needed to enhance enforcement against trade secret theft. Hopefully, this will include a recommendation in favor of a civil trade secrets law, which in this era of stretched government resources may lead to a real increase in the protection of trade secrets.

I am an experienced trade secret litigator and have also assisted companies of all sizes to institute programs to better protect trade secrets and to investigate misappropriation of trade secrets.

Please contact me at ptoren@wmclaw.com should you have any questions or need assistance in this area.

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