December 12, 2017

“Private Right of Action Against Theft of Trade Secrets Act of 2013”

Representative Zoe Lofgren (D- CA) has been busy. In addition to the bill she introduced with Sen. Wyden to amend the Computer Fraud and Abuse Act, she also introduced a bill entitled, “Private Right of Action Against Theft of Trade Secrets Act of 2013“(“PRATSA”), that would provide for a private civil claim for trade secrets theft under the Economic Espionage Act (“EEA”). The bill amends section 1832 of the EEA by including the following two subsections:

‘(c) Any person who suffers injury by reason of a violation of this section may maintain a civil action against the violator to obtain appropriate compensatory damages and injunctive relief or other equitable relief. No action may be brought under this subsection unless such action is begun within 2 years of the date of the act complained of or the date of the discovery of the damage.

‘(d) For purposes of this section, the term ‘without authorization’ shall not mean independent derivation or working backwards from a lawfully obtained known product or service to divine the process which aided its development or manufacture.’Section 1832 presently provides:

(a) Whoever, with intent to convert a trade secret, that is related to a product or service used in or intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly–

(1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information;

(2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys such information;

(3) receives, buys, or possesses such information, knowing the same to have been stolen or appropriated, obtained, or converted without authorization;

(4) attempts to commit any offense described in paragraphs (1) through (3); or

(5) conspires with one or more other persons to commit any offense described in paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy, shall, except as provided in subsection (b), be fined under this title or imprisoned not more than 10 years, or both.

(b) Any organization that commits any offense described in subsection (a) shall be fined not more than $5,000,000.

First, PRATSA is simpler than previous bills seeking to amend the EEA. Among other things, PRATSA does not require a statement describing reasonable secrecy measures or a declaration regarding the substantial need for nationwide service of process or misappropriation of trade secrets from the United States to another country and does not provide for civil ex parte seizure orders. This simpler approach to providing for civil remedies under the EEA may prove to be an easier sell in Congress.

Second, The proposed two-year statute of limitations is too short. It is shorter than civil theft of trade secrets statute under state law and than the current statute of limitations under the EEA, which is five years.

Third, because Section 1838 of the EEA expressly states that the EEA does not preempt state law, a trade secret holder could potential bring claims under both their state’s respective trade secret laws and the EEA. This could prove to be unnecessarily complication.

Fourth, the bill’s attempt to define reverse engineering is helpful because of the lack of clarity under the EEA. Some commentators have argued that persons could be charged under the EEA with theft of trade secrets based on reverse engineering, which is permitted under the UTSA.

The bill represents a good first step in amending the EEA to provide a private civil claim for trade secret theft in federal court.  Hopefully, it will go further than previous proposals.

 

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