Senate passes bill clarifying theft of trade secrets

The Senate passed the Theft of Trade Secrets Clarification Act by unanimous consent Tuesday night.

Sens. Patrick Leahy (D-Vt.) and Herb Kohl (D-Wis.) introduced S. 3642, which strengthens the scope of the Economic Espionage Act of 1996 to ensure that federal laws address the theft of trade secrets related to a product or service used in interstate commerce. 

“It is a straightforward fix, but an important one, as we work to ensure that American companies can protect the products they work so hard to develop, so they may continue to grow and thrive,” Leahy said on the Senate floor Tuesday. “I urge the House to act quickly to pass this common-sense legislation.”

Leahy and Kohl introduced the bill after a federal court ruling “narrowly” interpreted the law, Leahy said. The court held that the Economic Espionage Act provision applied only to trade secrets that are part of a product that is produced to be placed in interstate commerce, rather that simply used in interstate commerce. 

In United States v. Aleynikov, the defendant copied a stolen software code from his office in New York to a server in Germany, downloaded the code to his home computer in New Jersey, then flew to his new job in Illinois with the stolen source code in his possession and the code was used in interstate commerce.

“Because the company's proprietary software was neither placed in interstate commerce, nor produced to be placed in interstate commerce, the law did not apply — even though the stolen source code was part of a financial trading system that was used in interstate commerce every day,” Leahy said.

Leahy said the Theft of Trade Secrets Clarification Act corrects this loophole and ensures that the use of a stolen product in interstate commerce is also illegal.