Chairman Goodlatte Opening Statement at Markup of Trade Secrets Legislation

Chairman Goodlatte: Today we are here to markup S.1890, the “Defend Trade Secrets Act of 2016.” The bill puts forward modest enhancements to our federal trade secrets law, creating a federal civil remedy for trade secret misappropriation that will help American innovators protect their intellectual property from criminal theft by foreign agents and those engaging in economic espionage. This bill will help U.S. competiveness, job creation, and our economy. Trade secrets occupy a unique place in the IP portfolios of our most innovative companies. They can include confidential formulas, manufacturing techniques, and even customer lists. Examples of trade secrets include the formula for Coca-Cola and the Colonel’s secret recipe. But because they are unregistered and not formally reviewed like patents, there are no limitations on discovering a trade secret by fair, lawful methods, such as reverse engineering or independent development.  In innovative industries, that is simply the free market at work. Though trade secrets are not formally reviewed, they are protected from “misappropriation,” which includes obtaining the trade secret through improper or unlawful means, and “misappropriation” can take many forms, whether it is an employee selling blueprints to a competitor or a foreign agent hacking into a server. In addition, one could argue that even a foreign government’s policies to require forced technology transfer is a form of “misappropriation.” Though most states base their trade secret laws on the Uniform Trade Secrets Act, the federal government protects trade secrets through the Economic Espionage Act (“EEA”). In the 112th Congress, this committee helped enact two pieces of legislation to improve the protection of trade secrets. And in the 113th Congress we introduced and passed the first version of this Trade Secrets bill out of committee unanimously. Today we are taking up the Senate’s corollary bill to the House trade secrets legislation. The Senate-passed bill also includes several important updates. The Senate-passed bill provides that only the owner of a trade secret may bring a civil action for the secret's misappropriation, reduces the period of limitations from 5 to 3 years to align with the UTSA, and amends the definitions of ``trade secret'' and ``improper means.'' The bill also makes clear that ex parte seizures are only available in ``extraordinary circumstances,'' and places other limitations on the breadth of seizures. The bill further clarifies the appropriate scope of injunctions relating to employment to ensure that court orders are not contrary to applicable State laws. Finally, the Senate bill adds language expressing the sense of Congress that it is important to balance the interests of all parties when issuing an ex parte seizure, and instructing the Federal Judicial Center to develop best practices for the execution of seizures and the storage of seized information. The bill also includes a provision to provide protection to whistleblowers who disclose trade secrets to law enforcement in confidence for the purpose of reporting or investigating a suspected violation of law. These changes were accepted by the Senate Judiciary Committee on a voice vote without objection. Today in this committee, we are taking a significant and positive step toward improving our nation’s trade secrets laws and continuing to build on our important work in this area of intellectual property.  I urge all of my colleagues to support this bill. ###