Is there renewed momentum for a federal trade secret statute? Wisconsin Senator Herb Kohl’s office has issued a press release that he is co-sponsoring a new federal trade secrets bill, the Protecting American Trade Secrets and Innovation Act of 2012, with the assistance of Delaware Senator Chris Coons and Rhode Island Senator Sheldon Whitehouse. A link to the proposed Act can be found here.
Last fall, Senator Kohl and Senator Coons introduced an amendment to add a civil cause of action to the Economic Espionage Act (EEA), an effort that appears to have stalled. Like that amendment, this latest proposed legislation is intended to make it easier for U.S. companies to defend themselves against trade secret theft and corporate espionage.
Based on my initial review, the proposed Act is strikingly similar, if not identical in relevant part, to the amendment Senators Kohl and Coons proposed to the EEA last fall. For example, like that proposed amendment to the EEA, this provision provides for an ex parte seizure order (1) of any property used in connection with the alleged misappropriation of trade secrets or (2) to ensure the preservation of evidence. It also provides for nationwide service of process, another feature that was heralded in the amendment to the EEA last fall. Finally, like the proposed amendment last fall, the Act would impose a heightened pleading requirement — namely, a sworn representation that nationwide service of process is required or that the trade secrets were misappropriated to another country.
Unfortunately, it does not appear that the Act would attempt to remedy the havoc caused by the U.S. Court of Appeals for the Second Circuit’s recent opinion in U.S. v. Aleynikov. As readers of this blog may recall, the Second Circuit, at least in my humble view, imposed an unduly restrictive definition of what trade secrets were included within the EEA, by holding that trade secrets “related to or included in a product that is produced for or placed in interstate or foreign commerce” would not include proprietary software that was not actually sold into commerce. The proposed Act includes this same language that so flummoxed the Second Circuit and would, in my opinion, substantially limit the number of trade secrets that might be protected under this statute. (For more on my take on the Aleynikov decision, see my post here).
For those interested in reading more about the legislation, check out Robert Milligan’s post earlier this afternoon in the Seyfarth Shaw Trading Secrets Blog. Whatever the Act’s shortcomings, it would still be an improvement over existing law, and as I did with the proposed amendment to the EEA, I would urge those in the trade secret community to support its passage.