Lawmakers push to protect trade secrets from Chinese hackers

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Lawmakers are pushing for legislation that would give companies the right to take legal action in federal court against cyber thieves who steal trade secrets, citing the threat of light-fingered Chinese competitors.

{mosads}“At a time when cyber theft of trade secrets is at an all-time high — particularly as it involves Chinese competitors — it is critically important that U.S. companies have the ability to protect their trade secrets in federal court,” said Sen. Orrin Hatch (R-Utah).

The so-called Defend Trade Secrets Act, put forward by Hatch, would give trade secrets the same legal protections as other forms of intellectual property, boosting penalties by allowing companies to seek redress in federal courts.

The bicameral legislation comes amid growing frustration that companies from China are pilfering trade secrets and intellectual property from U.S. firms with impunity.

Last month, the Obama administration reached an agreement with Chinese President Xi Jinping that neither country will support economic espionage on private firms. Critics say the deal has no teeth and will do nothing to halt cyber theft.

Key technology and business groups have put their weight behind Hatch’s bill.

“This legislation will create a uniform federal standard with a well-balanced private right of action that allows trade secret owners to take action when their intellectual property is misappropriated,” said BSA | The Software Alliance President Victoria Espinel.

Hatch insisted Thursday that “I am not aware of any stakeholder opposition to this bill,” but the legislation has faced some criticism from legal experts who believe it will result in “trade secret trolls” bringing frivolous lawsuits with dire consequences.

Experts say the bill could result in a kind of legal bullying where companies file lawsuits to silence their competition.

“The threat of a trade secret misappropriation action can and does have a chilling effect on collaborative innovation efforts between businesses and can be used by those who would rather compete in a courtroom than the marketplace to quell legitimate competition,” wrote a group of 31 law professors in an open letter to Congress.

Critics also say that the bill is redundant against a backdrop of sufficient state regulation protecting trade secrets.

“Congress is rightly concerned about cyber-espionage by foreign countries and foreign business interests, but adding to well-established domestic trade secret law to address such concerns is incomplete, ill-advised, and potentially dangerous,” the open letter reads. 

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