[with Sharon K. Sandeen from the Hamline University School of Law] We write to express our continued concerns about the Defend Trade Secrets Act (“DTSA”) and our willingness to assist you in determining how best to improve enforcement of legitimate trade secret rights. In August 2014, 31 academics signed a letter raising many concerns with similar legislation then pending in the House and Senate. We attach a copy of that letter, which can be found here (the “August 2014 letter”).
In the July 29, 2015 press release announcing the new DTSA, the sponsors again identify the harm that they seek to address, namely, that “trade secrets can be stolen with a few keystrokes, and increasingly, they are stolen at the direction of a foreign government or for the benefit of a foreign competitor.” To justify the DTSA, the release argues that (a) current federal criminal law is “insufficient,” (b) the Department of Justice “lacks the resources” to prosecute (presumably) Economic Espionage Act (“EEA”) cases, (c) state law has not stopped “interstate” theft, and (d) Federal courts would be more effective in case administration and discovery. Thus, the release says that the DTSA would “harmonize” United States law, “provide for injunctions and damages,” and make trade secret law “consistent” with existing federal intellectual property law, which we understand to mean simply that there would now be a federal private trade secret cause of action. Presumably, the sponsors believe that these outcomes are needed, and would address cyber-misappropriations of trade secrets.
Indeed, these are the general arguments that were proffered in support of last year’s legislation. In response, the undersigned addressed these assertions in detail in a January 2015 article published in the Washington and Lee Law Review Online, titled “Here Come the Trade Secret Trolls,” which can be found here (the “January 2105 article”). In the January 2015 article, we concluded that the DTSA does “not address, much less solve,” the exact cyberespionage harm quoted above. Instead, we explained, the DTSA has many downsides, and is “most likely to spawn a new intellectual property predator: the heretofore unknown ‘trade secret troll,’ an alleged trade secret owning entity that uses broad trade secret law to exact rents via dubious threats of litigation directed at unsuspecting defendants.”
Unfortunately, the new DTSA appears to simply combine many of the provisions of the two pieces of legislation that were introduced in 2014 (S. 2267 and H.R. 5233). As a result, it addresses few of the concerns raised in the January 2015 article and the August 2014 letter. Moreover, the sponsors have failed to explain how the DTSA improves existing trade secret law, nor how it will specifically address the harms that it purports to mitigate. Thus, the August 2014 letter and January 2015 article remain highly relevant to an analysis of the DTSA’s benefits and drawbacks.
As with previous bills, the new DTSA would amend the EEA to include a private cause of action for trade secret misappropriation that is principally modeled on the Uniform Trade Secret Act (“UTSA”). Thus, the new DTSA is very similar to last year’s legislation. However, it has seven important (and potentially problematic) differences. The following is our quick understanding of how the new DTSA compares to the Senate version of the DTSA that was introduced last year. If we misunderstand these changes, we welcome your reply.
