2.1 United States
29. As you can tell from my previous intervention, we are quite eager to intervene under this item. The United States welcomes this opportunity to introduce the US Defend Trade Secrets Act, which was signed into law on 11 May 2016.
30. Before summarizing the key aspects of this new law, we will first provide a brief context regarding the rationale underlying this law, including the priority placed in the United States on defending trade secrets against misappropriation.
31. The 2013 Administration Strategy on Mitigating the Theft of US Trade Secrets articulated this priority unequivocally: “Trade secret theft threatens American businesses, undermines national security, and places the security of the US economy in jeopardy. These acts also diminish US export prospects around the globe and put American jobs at risk.”
32. Trade secrets are vital intellectual property assets held by innovators. Protection of those assets against theft and misappropriation is essential to foster innovation and promote economic growth. In fact, for some companies a core aspect of their success is based on the ability to protect their trade secrets.
33. As one commentator describes the value of trade secrets and the importance of their protection against theft: "In the Information Age, your trade secrets – a new technology, a business plan, insights extracted from data analytics – define your competitive advantage. And because business is global, competition can emerge anywhere, at any time. Not just success, but survival requires vigilance and careful management. Those how know how to protect and exploit the most important secrets can quickly leverage their business to profitability and dominance; while those who fail to recognize this new reality are doomed."
34. Generally speaking, trade secrets are information that has value by virtue of not being generally known, has value to others who cannot legitimately obtain the information, and is subject to reasonable efforts to maintain its secrecy. They can include formulas and recipes, techniques for manufacturing products, product designs, technical data, and several other categories of information. Trade secret theft is estimated to result in annual losses to US innovators in the range of hundreds of billions of dollars. Those losses have been linked to reduced innovation and slowing economic growth. In certain scenarios, the nature of the trade secret theft is that a victim does not know about the theft right away, allowing the thief to get greater lead time to benefit from the secret."
35. According to the Report of the Commission on the Theft of American Intellectual Property: "our intellectual property here is about $5 trillion. Of that, approximately $300 billion – about 6% - is stolen over the networks per year", which has been described as "the greatest transfer of wealth in history".
36. And the negative impact of trade secret theft is global, and many countries and international organizations are engaging intensively in efforts to combat trade secret misappropriation, as we will hear this morning as well as tomorrow at lunch at the trade secrets side event.
37. The OECD, for example, has issued two in-depth trade secret studies. The first study by Mark Schultz and Douglas Lippoldt, entitled "Approaches to Protection of Undisclosed Information (Trade Secrets)" (30 January 2014) takes stock of the available legal protection for trade secrets in a broad sample of countries.
38. The second study, also by Schultz and Lippoldt, entitled "Uncovering Trade Secrets – An Empirical Assessment of Economic Implications of Protection for Undisclosed Data" (also 2014), considers the relationship of the stringency of the protection of trade secrets to relevant economic performance indicators. The study finds a positive association between the stringency of trade secrets protection and the key indicators of innovation and international economic flows.
39. In the context of the United States, trade secret law has developed over time, using a variety of legal frameworks to redress theft, and to implement Article 39(1) and (2) of the TRIPS Agreement. The US framework has evolved to the adoption of specific statutes addressing trade secret theft and economic espionage.
40. The Defend Trade Secrets Act of 2016 amends Section 18 of the United States Code, Section 1836, the Economic Espionage Act, to establish a private civil cause of action for the misappropriation of trade secrets.
41. A national civil private cause of action for trade secret theft is intended to provide businesses with a uniform, reliable and predictable way to protect their valuable trade secrets anywhere in the country. The law defines a trade secret as covering all forms and types of financial, business, scientific, technical, economic, or engineering information, whether or not and how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if: the owner thereof has taken reasonable measures to keep such information secret; and the information derives independent economic value, actual or potential, from not being generally known to, or not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of information.
42. With respect to remedies, the law provides for an ex parte seizure remedy, which "enable[s] a trade secret owner under limited, controlled conditions, to proactively contain a theft before it progresses and the trade secret is lost". The law "balances the need for efficient recovery of a stolen trade secret with the rights of defendants and third-parties".
43. Additional remedies for the misappropriation of a trade secret under the law include injunctive relief and damages (i.e., actual loss to the plaintiff, unjust enrichment to the defendant, reasonable royalty where damages cannot readily be determined, and double damages for wilful and malicious theft). The law provides for the award of reasonable attorney's fees to a prevailing defendant if a claim of misappropriation is made in bad faith, or to a prevailing plaintiff if the trade secret was wilfully and maliciously misappropriated.
44. The Defend Trade Secrets Act was supported by a broad range of industries and also enjoyed strong, bi-partisan support in both houses of the United States Congress.
