The U.S. Senate approved legislation earlier this week to give companies greater legal protection for their intellectual property, and allow them for the first time to sue in federal court if it’s stolen. The Defend Trade Secrets Act passed 87-0, with strong White House backing. The bill’s supporters hope the unanimous vote will also boost its prospects in the House of Representatives.
“Some thieves would rather not go through the trouble of developing products themselves; they’d rather just steal the fruits of others’ creativity,” Senate Majority Leader Mitch McConnell said in urging passage of the bill that, he argued, will “help protect American innovation.”
Executives are increasingly concerned with protecting everything from blueprints and industrial designs to business strategies and customer lists against threats, including hacking and rogue employees—and for good reason. Theft of intellectual property, including trade secrets, costs U.S. businesses more than $300 billion a year, according to a 2013 report by the Commission on the Theft of American Intellectual Property, which was written by a bi-partisan group of former U.S. officials.
The Defend Trade Secrets Act has received support from a wide range of companies, including Boeing and Johnson & Johnson, and trade groups such as the Biotechnology Industry Organization, the U.S. Chamber of Commerce, and a software lobby whose members include Apple and Microsoft. Earlier this year the White House released a statement noting that the Administration strongly supports the bill as well. In particular, the Administration notes that the bill “would provide important protection to the Nation’s businesses and industries,” and that it would “provide businesses with a more uniform, reliable and predictable way to protect their valuable trade secrets anywhere in the country.”
Essentially, the legislation would give companies the right to sue in federal court to recover damages, enforce injunctions and prevent the further dissemination of stolen trade secrets. It would also create a uniform standard for what constitutes trade secret theft. Currently, if companies want to sue, they are relegated to state courts, where there is a patchwork of state laws. Although IP theft is already a federal crime, according to the bill’s sponsors, the U.S. Department of Justice lacks the resources to prosecute such crimes.
“Manufacturers in America are the world leaders in innovation. The know-how to perfect their products can take years, even decades,” National Association of Manufacturers (NAM) President and CEO Jay Timmons said in a statement after the Senate approved the bill. “These days, a competitor can steal that knowledge with the click of a mouse, costing a company good-paying jobs or even its entire business. This is a critical issue facing manufacturers, one that will define competition and success in the 21st century. That’s why we need all the tools possible to protect the superior knowledge and products that set our industry apart.
“IP can comprise up to 80 percent of the value of a company’s knowledge portfolio, and theft of these resources costs U.S. businesses roughly $250 billion a year,” Timmons continued. “Manufacturers need a strong, unified federal policy that will enforce strict laws to protect what many businesses consider their most valued corporate assets. Today’s vote is a step toward updating our laws and helping manufacturers prevent IP theft aggressively and efficiently.”
Protecting valuable product and technology information is increasingly difficult given the exchange of information among global partners and suppliers in the supply chain. In many regards, the threat will continue to grow. On one hand, it’s difficult to say whether the Defend Trade Secrets Act would actually deter companies from trying to steal IP. Then again, the ability to sue in federal court would certainly give companies a viable means to fight back, and, ultimately, may become a deterrent.
What are your thoughts on the Defend Trade Secrets Act?