Trade secret bill targets local theft, not foreign snooping

A Senate bill intended to curb trade secret theft wouldn’t directly address the rampant overseas digital espionage that is hurting American businesses, lawmakers and witnesses said at a Judiciary Committee hearing Wednesday.

But it’s not meant to, insisted supporters of the Defend Trade Secrets Act (DTSA). The measure is targeted at solving a pressing domestic issue: the rise of trade secret theft by rogue employees.

“That is the main situation that we need some help on,” said Tom Beall, chief intellectual property counsel at Corning, a glass and ceramics manufacturer, in response to a question from Sen. Orrin Hatch (R-Utah), a DTSA co-sponsor.

“Certainly cyber espionage is an issue, but that is not the thrust and the main point, not only of this bill, but our main concern at this point,” he added.

Discussion surrounding the DTSA has often referenced China’s alleged massive commercial espionage campaign that U.S. companies argue is costing them hundreds of billions of dollars each year and eroding their global competitiveness.

Backers have used this overseas commercial to argue in favor of the bill, while detractors have criticised DTSA for failing to mitigate these types of cyberattacks.

But lawmakers and industry supporters tried to clarify on Wednesday that the bill is only tangentially related to this foreign activity.

“Do you agree,” Hatch asked, “that cyber espionage is not the primary focus of the bill?”

Beall and Karen Cochran, the chief intellectual property counsel at manufacturing giant DuPont, concurred.

Instead, lawmakers pointed to the inability of American companies to go after current and former employees who steal trade secrets, such as a secret recipe or a customer list.

They explained that there is little legal redress for domestic trade secret theft, as current law requires the resource-strained Department of Justice (DOJ) to bring prosecution in these cases.

“I think carefully written legislation will fill this gap in the law,” said Sen. Patrick Leahy (D-Vt.), the top Democrat on Judiciary.

The DTSA, also originally co-sponsored by Sen. Chris Coons (D-Del.), would allow companies to bring suit themselves in federal court.

“We need this bill now more than ever as more and more American companies are losing jobs and revenue because they lack the ability to defend their trade secrets under federal civil law,” Coons said.

The measure has collected 15 total co-sponsors, including nine bipartisan members of the Judiciary Committee. The private sector is also fully behind DTSA.

“I’m not aware of any stakeholder opposition to this bill,” Hatch said.

But opposition has come from the academic community. Dozens of law and economics professors have argued the bill would actually create more uncertainty in trade secret law and adversely affect small businesses and startups, while failing to cut down on cyber espionage.

“I share the sponsors’ concerns about cyber espionage and the misappropriation of legitimate trade secrets by foreign operatives,” said Sharon Sandeen, a professor of law at Hamline University School of Law. “However, I think there are better ways to address those problems.”

Still, the broad support on Capitol Hill has made DTSA a prime target for movement before the year’s end. The House has a companion measure that could also move swiftly.

“Both Republicans and Democrats can agree that this bill is a win for American property rights and innovation,” Hatch said. “Why wouldn’t we move this bill now?”