Every year, industrial spies infiltrate American companies, stealing valuable trade secrets and leaking them to domestic competitors and corporations overseas. This crime cripples innovation and hampers economic growth, costing U.S. businesses billions of dollars each year. What’s worse, federal law does little to protect against this form of intellectual property theft. In fact, trade secrets are the only form of intellectual property lacking remedies under federal civil law. To safeguard American ingenuity and give companies the protections they deserve, Congress should act now to pass the Defend Trade Secrets Act, which we authored earlier this year.
In addition to the billions of dollars in direct economic costs, trade secret theft also stifles innovation by deterring companies from investing in research and development. Consider the case of DuPont—the chemical company that invented the life-saving Kevlar body armor used by our service members. DuPont invested significant time and resources developing a Kevlar material strong enough to withstand the penetrating trauma of rifle rounds and grenade shrapnel. Because of the company’s efforts, DuPont has saved thousands of lives.
But six years ago, a rogue employee leaked the manufacturing process of Kevlar to a rival company in South Korea, costing DuPont nearly $1 billion in economic losses. In an instant, the company’s comparative advantage—which it had earned after investing thousands of man-hours and millions of dollars—disappeared. Lacking a federal private right of action, DuPont executives were fortunate that the FBI was able to conduct a successful criminal investigation under the Economic Espionage Act. But the FBI lacks the resources to investigate the tens of thousand or more thefts that take place each year. Last year, in fact, the Department of Justice brought only 15 criminal cases for trade secret theft. The absence of a federal private right of action for trade secret misappropriation leaves American intellectual property vulnerable to theft and discourages research and innovation.
The Defend Trade Secrets Act seeks to stem the tide of trade secret theft by creating a harmonized, uniform federal standard to protect trade secrets. Without a federal standard, trade secret owners must appeal to state courts or federal prosecutors to protect their rights. This process is fraught with multistate procedural and jurisdictional issues, which are both costly and complicated. Moreover, the Department of Justice often lacks the resources necessary to prosecute many trade secret cases. These systemic issues put companies at a strategic disadvantage, especially when victims of trade secret theft need to recover information quickly before it crosses state lines or leaves the country.
At a time when trade secret theft is more prevalent than ever, U.S. companies must be able to protect their trade secrets in federal court. Our legislation offers that protection by creating a federal private right of action for misappropriation of trade secrets. It also allows business owners to seek court orders to retrieve trade secrets before stolen information is shared with competitors. To ensure that companies do not use seizure authority for anticompetitive purposes, our legislation requires those seeking redress to make a rigorous showing that they owned the trade secret, that the trade secret was stolen, and that third parties would not be harmed if an ex parte order were granted.
Not only has our bill attracted overwhelming bipartisan support in Congress; it has also garnered high-profile endorsements from businesses in a wide variety of industries affected by intellectual property law, including General Electric, Honda, Microsoft, Nike, Adobe, and Boeing to name a few. These companies understand that our bill is a win for American property rights and innovation.
We are pleased with the widespread industry support and call on our colleagues in Congress to enact this bill into law.
Hatch is Utah’s senior senator, serving since 1977. He is chairman of the Finance Committee, and also sits on the Health, Education, Labor and Pensions, and the Judiciary committees. Coons is Delaware’s junior senator, serving since 2010. He sits on the Appropriations; the Foreign Relations; the Judiciary; and the Small Business and Entrepreneurship committees.