[Congressional Record Volume 158, Number 107 (Tuesday, July 17, 2012)]
[Senate]
[Pages S5086-S5087]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. Coons, and Mr. Whitehouse):
  S. 3389. A bill to modify chapter 90 of title 18, United States Code, 
to provide Federal jurisdiction for theft of trade secrets; to the 
Committee on the Judiciary.
  Mr. KOHL. Mr. President, I rise today to introduce the Protecting 
American Trade Secrets and Innovation Act of 2012. This legislation 
will help American companies protect their valuable trade secrets by 
giving them the additional option of seeking redress in Federal courts 
when they are victims of economic espionage or trade secret theft. 
Stolen trade secrets cost American companies billions of dollars each 
year and threaten their ability to innovate and compete globally. Our 
bill ensures that companies have the most effective and efficient ways 
to combat trade secret theft and recoup their losses, helping them to 
maintain their global competitive edge.
  Today, as much as 80 percent of companies' assets are intangible, the 
majority of them in the form of trade secrets. This includes everything 
from financial, business, scientific, technical, economic, or 
engineering information, to formulas, designs, prototypes, processes, 
procedures, and codes. Trade secrets are often the lifeblood of a 
business. If they are stolen and wind up in the hands of competitors, 
it can wipe out years of research and development and cost millions of 
dollars in losses. The chief executive of GM recently said that he 
worries about trade secret theft ``every day.'' This comes as no 
surprise considering the loss to Ford Motor Company in 2006 when an 
employee stole 4,000 documents which he took to China and used for the 
benefit of his new employer Beijing Automotive Company, a competitor to 
Ford. The damage to Ford was estimated to be between $50 million and 
$100 million.
  In 1996, Congress enacted the Economic Espionage Act, which made 
economic espionage and trade secret theft a Federal crime. Nearly 15 
years later, trade secret theft and economic espionage continue to pose 
a threat to U.S. companies, yet there is no Federal civil remedy for 
victims. To complement the criminal enforcement of economic espionage 
and State trade secret laws, the Protecting American Trade Secrets and 
Innovation Act would provide another avenue for companies to protect 
their trade secrets. The bill enables victims of trade secret theft to 
seek injunctive relief, putting an immediate halt to trade secret 
misappropriation, and compensation for their losses in Federal court. 
It will help fill a gap in Federal intellectual property law by 
providing legal protections for non-patentable, non-copyrightable 
innovations, on the condition that the owner of the innovation has 
taken reasonable measures to keep the innovation a secret.
  Today, companies that fall victim to economic espionage and trade 
secret theft often can only bring civil actions in State court, under a 
patchwork of State laws, to stop the harm or seek compensation for 
losses. While State courts may be a suitable venue in some cases, major 
trade secret cases will often require tools available more readily in 
Federal court, such as nationwide service of process for subpoenas, 
discovery and witness depositions. In addition, for trade secret 
holders operating nationwide, a single Federal statute can be more 
efficient than navigating 50 different State laws. Finally, our bill 
permits judges to issue seizure orders to prevent defendants from 
destroying evidence. In sum, our bill demonstrates a Federal commitment 
to trade secret protection by expanding the legal options for victims 
of economic espionage and trade secret theft.
  This legislation will not inundate Federal courts with minor trade 
secret cases because it includes limits so that only the most serious 
cases requiring Federal courts will be permitted. These limitations 
require the victim of trade secret theft to certify that the dispute 
requires either a substantial need for nationwide service of process or 
the misappropriation of trade secrets from the U.S. to another country. 
Finally, it is important to emphasize that our legislation is not 
intended to replace State trade secret laws, but to complement them to 
ensure that victims of economic espionage and trade secret 
misappropriation can get the most prompt, effective and efficient 
justice.
  We cannot take lightly the threat of trade secrets theft to American 
businesses, American jobs, and American innovation. This legislation is 
another simple and straightforward step we can take to help companies 
defend themselves against trade secret theft. It demonstrates our 
commitment at the Federal level to protect all forms of a business's 
intellectual property and their innovative spirit.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3389

       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 ``Protecting American Trade 
     Secrets and Innovation Act of 2012''.

     SEC. 2. FEDERAL JURISDICTION FOR THEFT OF TRADE SECRETS.

       (a) In General.--Section 1836 of title 18, United States 
     Code, is amended to read as follows:

     ``Sec. 1836. Civil proceedings

       ``(a) Private Civil Actions.--
       ``(1) In general.--A person may bring a civil action under 
     this subsection if the person is aggrieved by--
       ``(A) a violation of section 1831(a) or 1832(a); or

[[Page S5087]]

       ``(B) a misappropriation of a trade secret that is related 
     to or included in a product that is produced for or placed in 
     interstate or foreign commerce.
       ``(2) Pleadings.--A complaint filed in a civil action 
     brought under this subsection shall--
       ``(A) describe with specificity the reasonable measures 
     taken to protect the secrecy of the alleged trade secrets in 
     dispute; and
       ``(B) include a sworn representation by the party asserting 
     the claim that the dispute involves either substantial need 
     for nationwide service of process or misappropriation of 
     trade secrets from the United States to another country.
       ``(3) Civil ex parte seizure order.--
       ``(A) In general.--In a civil action brought under this 
     subsection, the court may, upon ex parte application and if 
     the court finds by clear and convincing evidence that issuing 
     the order is necessary to prevent irreparable harm, issue an 
     order providing for--
       ``(i) the seizure of any property (including computers) 
     used or intended to be used, in any manner or part, to commit 
     or facilitate the commission of the violation alleged in the 
     civil action; and
       ``(ii) the preservation of evidence in the civil action.
       ``(B) Scope of orders.--An order issued under subparagraph 
     (A) shall--
       ``(i) authorize the retention of the seized property for a 
     reasonably limited period, not to exceed 72 hours under the 
     initial order, which may be extended by the court after 
     notice to the affected party and an opportunity to be heard;
       ``(ii) require that any copies of seized property made by 
     the requesting party be made at the expense of the requesting 
     party;
       ``(iii) require the requesting party to return the seized 
     property to the party from which the property were seized at 
     the end of the period authorized under clause (i), including 
     any extension; and
       ``(iv) include an appropriate protective order with respect 
     to discovery and use of any property that has been seized, 
     which shall provide for appropriate procedures to ensure that 
     confidential, private, proprietary, or privileged information 
     contained in the seized property is not improperly disclosed 
     or used.
       ``(C) Seizures.--A party injured by a seizure under an 
     order under this paragraph--
       ``(i) may bring a civil action against the applicant for 
     the order; and
       ``(ii) shall be entitled to recover appropriate relief, 
     including--

       ``(I) damages for lost profits, cost of materials, and loss 
     of good will;
       ``(II) if the seizure was sought in bad faith, punitive 
     damages; and
       ``(III) unless the court finds extenuating circumstances, 
     to recover a reasonable attorney's fee.

       ``(4) Remedies.--In a civil action brought under this 
     subsection, a court may--
       ``(A) issue--
       ``(i) an order for appropriate injunctive relief against 
     any violation described in paragraph (1), including the 
     actual or threatened misappropriation of trade secrets;
       ``(ii) if determined appropriate by the court, an order 
     requiring affirmative actions to be taken to protect a trade 
     secret; and
       ``(iii) if the court determines that it would be 
     unreasonable to prohibit use of a trade secret, an order 
     requiring payment of a reasonable royalty for any use of the 
     trade secret;
       ``(B) award--
       ``(i) damages for actual loss caused by the 
     misappropriation of a trade secret; and
       ``(ii) damages for any unjust enrichment caused by the 
     misappropriation of the trade secret that is not addressed in 
     computing damages for actual loss;
       ``(C) if the trade secret described in paragraph (1)(B) is 
     willfully or maliciously misappropriated, award exemplary 
     damages in an amount not more than the amount of the damages 
     awarded under subparagraph (B); and
       ``(D) 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 and maliciously 
     misappropriated, award reasonable attorney's fees to the 
     prevailing party.
       ``(b) Jurisdiction.--The district courts of the United 
     States shall have original jurisdiction of civil actions 
     brought under this section.
       ``(c) Period of Limitations.--A civil action under this 
     section may not be commenced later than 3 years after the 
     date on which the misappropriation is discovered or by the 
     exercise of reasonable diligence should have been discovered. 
     For purposes of this subsection, a continuing 
     misappropriation constitutes a single claim of 
     misappropriation.''.
       (b) Definitions.--Section 1839 of title 18, United States 
     Code, is amended--
       (1) in paragraph (3), by striking ``and'' at the end;
       (2) in paragraph (4), by striking the period at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(5) the term `misappropriation' means--
       ``(A) acquisition of a trade secret of another by a person 
     who knows or has reason to know that the trade secret was 
     acquired by improper means; or
       ``(B) disclosure or use of a trade secret of another 
     without express or implied consent by a person who--
       ``(i) used improper means to acquire knowledge of the trade 
     secret;
       ``(ii) at the time of disclosure or use, knew or had reason 
     to know that the knowledge of the trade secret was--

       ``(I) derived from or through a person who had used 
     improper means to acquire the trade secret;
       ``(II) acquired under circumstances giving rise to a duty 
     to maintain the secrecy of the trade secret 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 of the 
     trade secret or limit the use of the trade secret; or

       ``(iii) before a material change of the position of the 
     person, knew or had reason to know that--

       ``(I) the trade secret was a trade secret; and
       ``(II) knowledge of the trade secret had been acquired by 
     accident or mistake; and

       ``(6) the term `improper means'--
       ``(A) includes theft, bribery, misrepresentation, breach or 
     inducement of a breach of a duty to maintain secrecy, or 
     espionage through electronic or other means; and
       ``(B) does not include reverse engineering or independent 
     derivation.''.
       (c) Technical and Conforming Amendment.--The table of 
     sections for chapter 90 of title 18, United States Code, is 
     amended by striking the item relating to section 1836 and 
     inserting the following:

``1836. Civil proceedings.''.

       (d) Rule of Construction.--Nothing in the amendments made 
     by this section shall be construed to modify the rule of 
     construction under section 1838 of title 18, United States 
     Code, or to preempt any other provision of law.
                                 ______