Staffers: Trade Secret Bills Will Move Early, Won't Be ‘Held Hostage' by Patent Issues

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By Tamlin Bason

Jan. 12 — Congress is “very, very close” to finalizing legislation to create a federal private right of action for trade secret misappropriation, and such legislation will likely move swiftly and independent of any patent litigation reform efforts, congressional staffers said Jan. 8.

Bills to federalize trade secret law were introduced in both chambers during the last Congress, and the House bill was even reported out of the Judiciary Committee. However, there was not enough time for the full House to act on the measure, and there are still some concerns with various provisions that need to be worked out.

But, “This is a priority for members,” Jason G. Everett, who serves as chief minority counsel for the House Subcommittee on Courts, Intellectual Property and the Internet, said.

Reining in trade secret theft is also a top priority for the Senate and for the administration, as evident by the fact that Everett's remarks were given during the Patent and Trademark Office's first ever day-long symposium on trade secret issues.

Came Close Last Year

The House's Trade Secrets Protection Act of 2014 was favorably reported out of the Judiciary Committee in September, leaving many to hope that the bill would move during the lame-duck session. No action was taken, however, and so the House bill, like its Senate counterpart—the Defend Trade Secrets Act of 2014—must be reintroduced in the 114th Congress.

The Senate bill was first, having been introduced in April by Sens. Christopher A. Coons (D-Del.) and Orrin G. Hatch (R-Utah). The House bill was introduced in July by Rep. George Holding (R-N.C.).

In addition to creating a federal civil private right of action for trade secret misappropriation, both bills would allow a trade secret owner to seek injunctive relief and monetary damages, and both would also allow a plaintiff to seek an ex parte order authorizing the seizure of any property that was used to help facilitate the commission of the misappropriation. That provision made some stakeholders—and lawmakers—nervous.

The House version that was reported out of committee actually contained a narrower seizure provision than what was initially introduced, which in turn was already narrower than the Senate's similar provision.

Should Happen This Year

“The legislation is very, very close,” Ted Schroeder, who works for Senator Coons, said during the symposium. “The House bill reflected a lot of changes on the ex parte seizure provision.”

Schroeder said that while he expects the legislation to be reintroduced shortly, there is a chance that Sen. Chuck Grassley (R-Iowa), the new chairman of the Senate Committee on the Judiciary, will want to hold hearings on the proposals.

“We are continuing to take input about stakeholder concerns and to address those as best we can,” Schroeder said.

On the House side, Holding is no longer on the House Judiciary Committee, and so Everett, who works for the IP subcommittee's ranking member, Rep. Jerrold Nadler (D-N.Y.), said they are trying to identify a Republican member to serve as primary sponsor for the legislation. Finding bipartisan support, which is rarely a problem on IP issues, is even less of a challenge with respect to trade secrets.

“One of the rewarding things about working on trade secrets is that everybody thinks that they are a good thing and need to be protected,” Schroeder said.

Aaron Cooper, who is currently with Covington and Burling LLP, Washington, but previously worked for Sen. Patrick Leahy (D-Vt.) as the Senate Judiciary Committee’s chief counsel for intellectual property, noted that the trade secret issue does not seem to cause fiction between American business sectors, which is not necessarily the case for other forms of intellectual property—for instance, the technology and pharmaceutical sectors in patents and the content and technology sectors in copyrights.

Everett agreed that no specific sectors seem to be speaking out against the legislation, which is one thing that makes it attractive to lawmakers.

No Reason to Wait on Patent Litigation Reform

The broad industry support also makes it more likely that a trade secret bill can move swiftly, even if patent litigation abuse efforts once again prove more controversial, and thus more difficult to enact.

The moderator of the panel, the PTO's Dana Robert Colarulli, asked if there was a chance that the trade secrets legislation would be “held hostage” by the patent litigation reform issue. Schroeder said that was unlikely.

“There is not just one track for legislation,” he said. “I think this will proceed on its own time frame.”

To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Tom P. Taylor at ttaylor@bna.com