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Q&A: Protecting Innovation & Trade Secrets

August 13, 2016
Senator Chuck Grassley , Traer Star-Clipper

Q: What are trade secrets?

A: Like a patent or trademark, trade secrets are a valuable form of intellectual property that allow innovators and businesses to legally protect their discoveries and other proprietary information. Some of the most "famous" trade secrets today include Coca-Cola's formula, the recipe for Kentucky Fried Chicken, and Google's algorithm. To maintain legal protection for trade secrets, trade secret owners must employ reasonable measures to maintain their secrecy.

Q: How are trade secrets under attack?

A: Trade secret thieves ranging from corporate competitors, to transnational criminal organizations, to foreign intelligence services have recognized the value of trade secrets and are increasingly seeking to steal them rather than making the effort to engineer solutions on their own. Today, protecting trade secrets has become an increasingly difficult undertaking as thieves are utilizing new technological measures to aid their crimes. Consequently, it's now estimated that the American economy loses over $300 billion and 2.1 million jobs every year because of trade secret theft.

Even Iowa companies aren't exempt from these attacks from trade secret thieves. DuPont-Pioneer was the victim in a high profile 2013 trade secrets case in which six foreign nationals conspired to steal engineered corn seeds in order to benefit a foreign company.

Q: How does the Defend Trade Secrets Act help solve this problem?

A: Unfortunately, as the pace of economic espionage and trade secret theft against American companies mounts, federal law enforcement authorities don't have the resources or the bandwidth to prosecute more than a fraction of these crimes. This means that victims of trade secret theft cannot rely on criminal enforcement, making a civil cause of action an effective way to go after perpetrators.

Traditionally, trade secrets have been protected under state laws. However, the existing framework for trade secret protection creates an uneven patchwork of laws and difficult procedural hurdles in the many cases where a thief takes a stolen trade secret across state lines. This is especially true when it comes to the procedural challenges of seeking fast and effective relief in the critical window after a theft occurs, since obtaining necessary service of process and rapid injunctive relief can prove difficult under the current system.

The Defend Trade Secrets Act amends the Economic Espionage Act of 1996 to create a federal civil remedy for trade secret misappropriation, allowing for a uniform national standard without preempting state law.

As chairman of the Senate Judiciary Committee, I shepherded this legislation through the committee process. In April, the Defend Trade Secrets Act passed by a bipartisan vote of 87-0 and was signed into law by the President this spring.

The law provides clear rules and predictability for trade secret cases. Victims are now able to move quickly to federal court, with certainty of the rules, standards, and practices to stop trade secrets from being disseminated and losing their value. By improving trade secret protection, this law also helps to incentivize future innovation.

 
 

 

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