House Committee Approves Federal Trade Secret Bill

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

April 20 — Legislation that would create a new federal private right of action for trade secrets theft, which could benefit the life sciences, is on a glide path to becoming law.

The House Judiciary Committee unanimously approved the Senate-passed version of the Defend Trade Secrets Act April 20. House Republicans are planning floor action next week. The White House has indicated that President Barack Obama would sign the bill into law.

The DTSA would modify the Economic Espionage Act (EEA), which is a criminal statute. It would create a federal private right of action for theft of such secrets, which include customer lists, formulas, algorithms, software codes, unique designs, industrial techniques and manufacturing processes.

The measure wouldn't preempt state laws, giving victims the option of seeking civil remedies for trade secret theft in federal or state court.

The Senate approved the bill on an 87-0 vote April 4.

Legislation Could Benefit Life Sciences

“BIO members agree that trade secret law has been due for more national harmonization. Allowing private causes of actions is important for commerce and puts us more on par with our trading partners in other countries because up to now, U.S. trade secret law has been somewhat vulcanized, hardened into a range of state laws or no trade secret laws,” Hans Sauer, deputy counsel for intellectual property for the Biotechnology Innovation Organization, told Bloomberg BNA in a April 21 phone interview.

Sauer also said that the process to the legislation “had been exceptionally productive and bipartisan, in sharp contrast to other matters affecting the life sciences on which Congress has been so divided.”

“Biotechs have a somewhat unique need for this kind of protection as the complicated processes necessary to produce the biologics could benefit from a uniform trade secret law,” Boris Zelkind of Knobbe Martens, San Diego, told Bloomberg BNA in an April 15 phone interview.

“And with recent court decisions that some in the life sciences feel have diluted U.S. patent law, a federal trade secret law gives them another quiver for their bow, whereas they used to automatically reach for patent protection,” Zelkind said ( (9 LSLR 752, 6/26/15).

The bill was supported by the Advanced Medical Technology Association (AdvaMed), BIO, Boston Scientific, BSA, Eli Lilly and Co., Johnson & Johnson and Pfizer, among others.

Moving Bill to President

The Senate-passed bill (S. 1890), differs from the original House bill. Most significantly, it tightens the conditions for complainants to get seizure orders for allegedly misappropriated information. Also, a company couldn't block an employee from moving to a competitor simply because they know trade secrets.

The Senate's changes were “important updates,” Committee Chairman Robert W. Goodlatte (R-Va.) said in an opening statement.

“S. 1890 gives American innovators a powerful new tool which will help them compete in an ever-evolving global market,” Goodlatte said in a post-vote press release.

No amendments were offered before the committee vote.

“I understand that we want to get this directly to the president,” said Rep. Zoe Lofgren (D-Calif.), who withheld an amendment.

House Majority Leader Kevin McCarthy (R-Calif.) said the full House will consider the bill next week.

“Behind every great innovation lives an ecosystem of ideas, know-how and will,” McCarthy said in a statement. “Protecting these, through the rule of law, is what sets America apart from our global competitors in leading the 21st Century.”

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.comand John T. Aquino in Washington at

To contact the editor responsible for this story: Mike Wilczek in Washington at

For More Information

The bill is at

The Economic Espionage Act, as modified, is at

The Senate Judiciary Committee report is at

Request Health Care on Bloomberg Law