[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.
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