[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1770 Introduced in Senate (IS)]
113th CONGRESS
1st Session
S. 1770
To provide for Federal civil liability for trade secret
misappropriation in certain circumstances.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 21, 2013
Mr. Flake introduced the following bill; which was read twice and
referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To provide for Federal civil liability for trade secret
misappropriation in certain circumstances.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Future of American Innovation and
Research Act of 2013'' or the ``FAIR Act''.
SEC. 2. DEFINITIONS.
In this Act--
(1) the term ``covered trade secret'' means a trade secret
that is related to or included in a product or service that is
used in or reasonably anticipated to be used in interstate or
foreign commerce;
(2) the term ``improper means''--
(A) includes theft, bribery, misrepresentation,
breach or inducement of a breach of a duty to maintain
secrecy, and espionage through electronic or other
means; and
(B) does not include reverse engineering or
independent derivation alone;
(3) the term ``misappropriate'' means--
(A) to acquire a trade secret of another by
improper means, if the person who acquires the trade
secret knows or has reason to know that the acquisition
is by improper means; or
(B) to disclose or use a trade secret of another
without express or implied consent, if the person who
discloses or uses the trade secret--
(i) used improper means to acquire
knowledge of the trade secret; or
(ii) at the time of the disclosure or use,
knows or has reason to know that his or her
knowledge of the trade secret was--
(I) derived from or through a
person who used improper means to
acquire the trade secret;
(II) acquired under circumstances
giving rise to a duty to maintain the
secrecy, or limit the use, of the trade
secret; or
(III) derived from or through a
person who owed a duty to the person
seeking relief to maintain the secrecy,
or limit the use, of the trade secret;
(4) the term ``person'' means a natural person,
corporation, business trust, estate, trust, partnership,
limited liability company, association, joint venture,
government, governmental subdivision or agency, or any other
legal or commercial entity; and
(5) the term ``trade secret'' means any information,
including a formula, pattern, compilation, program, device,
method, technique, or process, that--
(A) derives independent economic value, actual or
potential, from not being generally known to, and not
being readily ascertainable through proper means by,
the public or other persons who can obtain economic
value from the disclosure or use of the information;
and
(B) is the subject of efforts that are reasonable
under the circumstances to maintain the secrecy of the
information.
SEC. 3. CIVIL ACTION.
(a) In General.--The owner or lawful possessor of a covered trade
secret may bring a civil action against a person who misappropriates,
threatens to misappropriate, or conspires to misappropriate the covered
trade secret--
(1) while located outside the territorial jurisdiction of
the United States; or
(2) on behalf of, or for the benefit of, a person located
outside the territorial jurisdiction of the United States.
(b) Federal Court Jurisdiction.--The district courts of the United
States shall have exclusive jurisdiction of a civil action under this
Act.
(c) Extraterritoriality.--A civil action under this Act may arise
from conduct outside the territorial jurisdiction of the United States
if the conduct, either by itself or in combination with conduct within
the territorial jurisdiction of the United States, causes or is
reasonably anticipated to cause an injury--
(1) within the territorial jurisdiction of the United
States; or
(2) to a United States person.
SEC. 4. REMEDIES.
In a civil action brought under this Act, a court may--
(1) issue--
(A) an order for appropriate injunctive relief
against any conduct described in section 3(a);
(B) an order requiring affirmative actions to be
taken to protect a covered trade secret from further
misappropriation; and
(C) if the court determines that it would be
unreasonable to prohibit further possession,
disclosure, or use of a covered trade secret, an order
requiring payment of a reasonable royalty for any
ongoing disclosure or use of a covered trade secret, in
addition to the damages described in paragraph (2);
(2) award--
(A) damages for actual loss caused by the
misappropriation of a covered trade secret; and
(B) damages for any unjust enrichment caused by the
misappropriation of a covered trade secret that is not
addressed in computing damages for actual loss under
subparagraph (A);
(3) if a trade secret is willfully or maliciously
misappropriated, award punitive or exemplary damages in an
amount not more than twice the amount of the damages awarded
under paragraph (2); and
(4) if a claim of misappropriation is made in bad faith, a
motion to terminate an injunction is made or opposed in bad
faith, or a trade secret is willfully or maliciously
misappropriated, award reasonable costs and attorney's fees to
the prevailing party.
SEC. 5. PROCEDURE.
(a) Pleadings.--
(1) Complaint.--A complaint filed in a civil action brought
under this Act shall include a sworn representation by the
plaintiff that the dispute involves conduct described in
section 3(a).
(2) Affirmative defense.--It shall be an affirmative
defense in a civil action brought under this Act that each
alleged covered trade secret in dispute was readily
ascertainable through proper means by other persons who did not
already know the covered trade secret at the time of any
alleged misappropriation, threat to misappropriate, or
conspiracy to misappropriate.
(b) Forum Non Conveniens.--In considering a motion to dismiss or
stay on forum non conveniens grounds filed in a civil action brought
under this Act, a court shall--
(1) give great weight to the plaintiff's choice of forum;
and
(2) consider whether the plaintiff reasonably could receive
fair and impartial treatment in the courts of the jurisdiction
in which the defendant is domiciled.
(c) Anti-Suit Injunctions.--In a civil action brought under this
Act, the court may enter an injunction enjoining a defendant over whom
the court has personal jurisdiction from pursuing subsequently filed
litigation in another jurisdiction if--
(1) the parties are the same in both matters;
(2) the resolution of the case before the enjoining court
will be dispositive of the action to be enjoined; and
(3) the action in the other jurisdiction threatens the
jurisdiction of the court or the purposes of this Act.
(d) Confidentiality.--In any proceeding relating to a civil action
brought under this Act, the court shall enter any order and take any
other action that is necessary and appropriate to preserve the
confidentiality of trade secrets, consistent with the requirements of
the Federal Rules of Civil Procedure, the Federal Rules of Evidence,
and all other applicable laws.
(e) Statute of Limitations.--A civil action brought under this Act
may not be commenced later than 3 years after the date on which the
conduct described in section 3(a) that forms the basis for the action
was discovered or by the exercise of reasonable diligence should have
been discovered.
SEC. 6. SEIZURES.
(a) In General.--In a civil action brought under this Act, the
court may, upon ex parte application and if the requirements under
subsection (b) are satisfied, issue an order (referred to in this
section as a ``seizure order'') providing for--
(1) the seizure of any property (including computers) used,
in any manner or part, to commit or facilitate the commission
of conduct described in section 3(a) that is alleged in the
civil action; and
(2) the preservation of evidence in the civil action.
(b) Requirements.--A court may issue a seizure order if--
(1) the applicant provides security in an amount that the
court determines is adequate to pay any damages a person may be
entitled to recover as a result of a wrongful seizure or
wrongful attempted seizure under this section; and
(2) the court finds that specific facts clearly show that--
(A) any order other than an ex parte seizure order
is not adequate to effectively cause the cessation of
the conduct described in section 3(a) that forms the
basis of the action;
(B) the applicant has not publicized the requested
seizure;
(C) the applicant is likely to succeed in showing
that the person against whom seizure is sought
misappropriated, threatened to misappropriate, or
conspired to misappropriate a covered trade secret of
which the applicant is the owner or lawful possessor;
(D) the applicant will suffer an immediate and
irreparable injury if a seizure is not ordered;
(E) the matter to be seized is located at the place
identified in the application;
(F) the harm to the applicant that would be caused
by denying the application outweighs the harm to the
legitimate interests of the person against whom seizure
is sought that would be caused by granting the
application; and
(G) if the applicant were to proceed on notice to
the person against whom seizure is sought, that person,
or persons acting in concert with that person, would
destroy, move, hide, or otherwise make the matter to be
seized inaccessible to the court.
(c) Procedure.--A seizure order shall--
(1) direct that service of a copy of the seizure order
shall be made by a Federal law enforcement officer (such as a
United States marshal), who, upon making service, shall carry
out the seizure under the seizure order;
(2) direct that any items seized shall be taken into the
custody of the court;
(3) include a protective order with respect to items
seized, to ensure that confidential, private, proprietary, or
privileged information contained in the items seized, including
any such information belonging to the defendant and third
parties, is appropriately protected and that access to the
items seized is appropriately restricted; and
(4) specify a hearing date, not earlier than 3 days and not
later than 10 days after the seizure order is issued, for the
court to review whether the items seized should remain in the
custody of the court.
(d) Order Under Seal.--
(1) In general.--Except as provided under paragraph (2), a
seizure order, together with any supporting documents, shall be
sealed until the person against whom the seizure order is
directed has an opportunity to contest the seizure order.
(2) Access after seizure.--A court shall allow a person
against whom a seizure order is directed to have access to the
seizure order and any supporting documents after the seizure is
carried out.
(e) Seizure Hearing.--
(1) Date.--A court that issues a seizure order shall hold a
hearing under this subsection on the date set by the court
under subsection (c)(4) unless a party shows good cause for
setting a different date.
(2) Burden of proof.--At a hearing under this subsection,
the party that obtained the seizure order shall have the burden
of proving that the factual and legal grounds necessary to
support the seizure order are still in effect.
(3) Dissolution or modification of order.--If a party fails
to meet the burden specified under paragraph (2), the court
shall dissolve or modify the seizure order appropriately.
(4) Discovery time limits.--The court may issue an order
modifying the time limits for discovery under the Federal Rules
of Civil Procedure as necessary to prevent the frustration of
the purposes of a hearing under this subsection.
(f) Injured Party.--
(1) Cause of action.--A party that is injured by a seizure
carried out in a civil action brought under this Act and that
prevails in the civil action may bring a civil action under
this subsection against the applicant for the seizure order in
a district court of the United States.
(2) Remedies.--A party that prevails in a civil action
brought under this subsection shall recover--
(A) reasonable costs and attorney's fees incurred
in defense against the seizure order described in
paragraph (1) unless the court finds that extenuating
circumstances merit denying such costs and fees; and
(B) lost profits and punitive damages if the
seizure order described in paragraph (1) was sought in
bad faith.
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