August 05, 2015 Practice Points

Defend Trade Secrets Act of 2015 Introduced in House & Senate

After seven years of vetting bills that would amend the EEA to provide a private cause of action and allow for ex parte seizure orders, Halligan argues, the time has come for Congress to act.

By Lesley McCall Grossberg

The push toward a federal trade secrets statute continues in the 114th Congress, with S. 1890 being introduced by Senators Hatch, Coons, Flake, Durbin, Tillis, and Baldwin on July 29, 2015. An identical House bill, H.R. 3326, was introduced by Representatives Collins, Nadler, Holding, Conyers, Chabot, and Jeffries. The bills represent a continuation of bipartisan legislative efforts from last year to create federal jurisdiction over trade secret misappropriation by adding a private civil cause of action to the Economic Espionage Act (EEA).

Leading trade secrets litigator R. Mark Halligan of FisherBroyles in Chicago has authored a law review article calling for Congress to finish the progress it made last year, when a previous version of the bill was favorably reported out of the House Judiciary Committee. Revisited 2015: Protection of U.S. Trade Secret Assets: Critical Amendments to the Economic Espionage Act of 1996, 14 J. MARSHALL REV. INTELL. PROP. L. 656 (2015), examines the shortcomings of the EEA as a deterrent to trade secret theft, as well as types of changes that lawyers can expect to be implemented by the pending legislation.

Because so few criminal prosecutions have occurred under the EEA, Halligan notes, the addition of a private civil cause of action is a critical tool for U.S. companies to address actual and threatened trade secret misappropriation. And federal jurisdiction over such claims will provide nationwide subpoena power, streamlining litigation and avoiding delays that occur in state court when witnesses are outside the jurisdiction of the forum court. Finally, a provision allowing for ex parte seizure orders will allow courts to preserve the status quo while the merits of the case are litigated, preventing the destruction or concealment of trade secret assets. The bill provides procedural safeguards to protect against abuse of the ex parte seizure authority by requiring that the issuing court provide written findings of fact and conclusions of law and conduct a hearing within seven days of issuing the order.

After seven years of vetting bills that would amend the EEA to provide a private cause of action and allow for ex parte seizure orders, Halligan argues, the time has come for Congress to act. The recent introduction of the Defend Trade Secrets Act of 2015 in both houses is certainly a step in the right direction.

Keywords: intellectual property, litigation, Economic Espionage Act, EEA, federal trade secrets, ex parte seizure order, Defend Trade Secrets Act of 2015

Lesley McCall Grossberg is with BakerHostetler in Philadelphia, Pennsylvania.


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Lesley McCall Grossberg – August 5, 2015