Private Federal Civil Actions for Trade Secret Infringement

by Dennis Crouch

Senator Coons (D-Del.) today proposed a pair of trade secret focused amendments to the pending Currency Exchange Rate Oversight Reform Act of 2011.

Most trade secret litigation occurs at the state level. Although Title 18 of the US Code creates a cause of action for Trade Secret Theft, that provision gives standing only to the Attorney General and not to private parties. Senator Coons' amendment would open the door to a Private Civil Action for Trade Secret Theft that would be brought in Federal Court. In his press release, Senator Coons writes:

The … amendment, introduced with Senator Herb Kohl (D-Wis.), would protect U.S. businesses from the theft of trade secrets by allowing victimized companies to sue for trade-secret theft in federal court. The legislation would allow for a single, uniform, nationwide cause of action instead of the patchwork of state laws now in place, and would elevate trade-secret intellectual property on the same level as copyright, trademark and patent violations.

Federal Trade Secret Theft under Section 1832(a) requires a host of intentional acts involving stealing, copying, or receiving trade secret information that is related to a product produced in interstate or foreign commerce. The Coons amendment would allow a private civil action with the additional requirement that the plaintiff submit a sworn affidavit that either (1) there is a substantial need for nationwide service of process or (2) the case involves misappropriation of trade secrets from the US to another country.

The amendment also provides for immediate ex parte seizure orders and the award damages for the infringement.

Senator Coons also proposed a second amendment that would allow Homeland Security to share information and suspected counterfeit product samples with intellectual property rightholders. This would loosen the current rules that restrict information that Customs & Border Patrol can share with US rightholders.

Learn more:

  • David Almeling, Four Reasons to Enact a Federal Trade Secrets Act, 19 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 769 (2009) (describing the lack of uniformity in state implementation of the Uniform Trade Secrets Act).

18 thoughts on “Private Federal Civil Actions for Trade Secret Infringement

  1. Actually, I seem to suggest that if the TS is the best mode, that the courts toss both causes of action on the basis of unclean hands — even under the new AIA.

  2. “someone recently suggested using both trade secret and patent protection for any particular invention”

    Who, and in what context? Link? Specifics?

  3. The trade secret amendment is an intriguing proposal. If passed, it could have the capacity to elevate trade secrets closer to the level of patents. Then, as trade secret litigation started making its way through the courts, it would be interesting to sit back and watch how the 2 types of IP protection might interact with, counterbalance, and complement each other. For instance, someone recently suggested using both trade secret and patent protection for any particular invention. I predict some very interesting developments in this area.

  4. Related to trade secrets is a case today, /media/docs/2011/10/11-1002-1003.pdf, Atlantic Research v. Troy

    where Atlantic successfully (subject to a new trial because of jury contamination) on a trade secret that was the best mode of a patent they also asserted. (The Feds affirmed the patent was invalid, but on written description grounds.)

    I fault the defense in not raising the issue of “unclean hands” for obtaining a patent with claims specifically intended to cover what the inventor considered to be a trade secret without actually disclosing it in the patent specification.

    My point is this: Even though failure to disclose the best mode may not be grounds for holding a patent invalid, it might and should be enough to prevent the the trade secret owner from using the court system to protect against misappropriation of the trade secret under the doctrine of unclean hands.

  5. federalism is not an issue on your radar scope

    Sure it is. But that’s a far cry from “mere thought that some may be advocating the federalization of state law is quite troubling indeed“.

    The anti-Federalist movement mainly consists of Republican mouthbreathers. Look what happened to the government the last time they were in charge for 8 years. Sociopathological hypocrites.

  6. Apparently, federalism is not an issue on your radar scope.

    Yes, let’s add to the mix:

    1. Forum shopping
    2. Ex parte seizures
    3. Expansion of “commerce clause” powers
    4. Render existing federal precedent “obsolete”
    5. Elevate trade secrets to the status of property
    6. Perhaps amend 28 USC 1498
    7. Etc.

    Sorry, but this is an issue that in my opinion requires far more consideration than “It seems like a good idea”.

  7. I agree Pro se. We need a federal divorce statute too (that would be a joke but there was a bill pending years ago).

  8. Just the mere thought that some may be advocating the federalization of state law is quite troubling indeed.

    LOL. Pxtxnt txxbxggers unite!!!!!!!

  9. I can certainly see this issue with the best mode.

    I can also see the issue where a claim is held non-enabled or lacking written description support and the “best mode”, trotted out in desperation after the claim is rejection/invalidated, is found to be new matter.

  10. Trade secrets are associated with “unfair competition”, and not the rights of exclusion associated with patents and copyrights. Just the mere thought that some may be advocating the federalization of state law is quite troubling indeed.

    Perhaps, in the name of national uniformity, we should be advocating the federalization of state laws as they pertain to the ownership of patents and copyrights.

  11. Without question, IP counsel is going to advise clients to maintain more (if not all) innovation as a trade secret (technology that can’t be reversed engineered) and in addition sandbag the process by withholding the best mode if not crucial to enabling the claimed invention if and when you do file for a patent. I can certainly see this issue with the best mode.

  12. Trade secret is much more valuable and there are going to be a lot more inventions (as many as practical – I would think in the new IP lawyer counsel) maintained as such.

    I highly doubt there will be a detectable impact on the number of patent filings as a result of any increase in “trade secret value.”

  13. This of course is the natural outcome of the recent patent reform. Trade secret is much more valuable and there are going to be a lot more inventions (as many as practical – I would think in the new IP lawyer counsel) maintained as such. As such, there is going to be a concern and push for a federal cause of action to get full relief.

  14. …Because Trade Secrets promote the Progress of Science and useful Arts…

    Oh, wait, THEY DON’T.

  15. Interesting – the elevation of trade secret to the same level as other intellectual property.

    Who had ever thought of that?

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