49–006 

113TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 113–657 

TRADE SECRETS PROTECTION ACT OF 2014 

DECEMBER 11, 2014.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. GOODLATTE, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

[To accompany H.R. 5233] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 5233) to amend chapter 90 of title 18, United States Code, 

to provide Federal jurisdiction for the theft of trade secrets, and for 

other purposes, having considered the same, reports favorably 

thereon with an amendment and recommends that the bill as 

amended do pass. 

CONTENTS 

Page 

The Amendment ...................................................................................................... 1 

Purpose and Summary ............................................................................................ 5 

Background and Need for the Legislation ............................................................. 5 

Hearings ................................................................................................................... 7 

Committee Consideration ........................................................................................ 8 

Committee Votes ...................................................................................................... 8 

Committee Oversight Findings ............................................................................... 8 

New Budget Authority and Tax Expenditures ...................................................... 8 

Congressional Budget Office Cost Estimate .......................................................... 8 

Duplication of Federal Programs ............................................................................ 9 

Disclosure of Directed Rule Makings ..................................................................... 9 

Performance Goals and Objectives ......................................................................... 9 

Advisory on Earmarks ............................................................................................. 9 

Section-by-Section Analysis .................................................................................... 10 

Changes in Existing Law Made by the Bill, as Reported ..................................... 14 

The Amendment 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Trade Secrets Protection Act of 2014’’. 


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SEC. 2. FEDERAL JURISDICTION FOR THEFT OF TRADE SECRETS. 

(a) IN GENERAL.—Section 1836 of title 18, United States Code, is amended by 

striking subsection (b) and inserting the following: 

‘‘(b) PRIVATE CIVIL ACTIONS.— ‘‘(1) IN GENERAL.—An owner of a trade secret may bring a civil action under 

this subsection if the person is aggrieved by a misappropriation of a trade secret 

that is related to a product or service used in, or intended for use in, interstate 

or foreign commerce. 

‘‘(2) CIVIL SEIZURE.— ‘‘(A) IN GENERAL.— ‘‘(i) APPLICATION.—Based on an affidavit or verified complaint satisfying the requirements of this paragraph, the court may, upon ex parte 

application, issue an order providing for the seizure of property necessary to preserve evidence in a civil action brought under paragraph 

(1) or to prevent the propagation or dissemination of the trade secret 

that is the subject of the action. 

‘‘(ii) REQUIREMENTS FOR ISSUING ORDER.—The court may not grant an 

application under clause (i) unless the court finds that it clearly appears from specific facts that— 

‘‘(I) an order issued pursuant to Rule 65(b) of the Federal Rules 

of Civil Procedure would be inadequate to achieve the purpose of 

this paragraph because the party to which the order would be 

issued would evade, avoid, or otherwise not comply with such an 

order; 

‘‘(II) an immediate and irreparable injury will occur if such seizure is not ordered; 

‘‘(III) the harm to the applicant of denying the application outweighs the harm to the legitimate interests of the person against 

whom seizure would be ordered of granting the application and 

substantially outweighs the harm to any third parties who may be 

harmed by such seizure; 

‘‘(IV) the applicant is likely to succeed in showing that the person 

against whom seizure would be ordered misappropriated the trade 

secret by improper means, or conspired to use improper means to 

misappropriate the trade secret, and is in possession of the trade 

secret; 

‘‘(V) the application describes with reasonable particularity the 

matter to be seized and, to the extent reasonable under the circumstances, identifies the location where the matter is to be seized; 

‘‘(VI) the person against whom seizure would be ordered, or persons acting in concert with such person, would destroy, move, hide, 

or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person; and 

‘‘(VII) the applicant has not publicized the requested seizure. 

‘‘(B) ELEMENTS OF ORDER.—If an order is issued under subparagraph (A), 

it shall— 

‘‘(i) set forth findings of fact and conclusions of law required for the 

order; 

‘‘(ii) provide for the seizure of any property in a manner that minimizes any interruption of the business operations of third parties and, 

to the extent possible, does not interrupt those legitimate business operations of the person accused of misappropriating the trade secret that 

are unrelated to the trade secret that has allegedly been misappropriated; 

‘‘(iii) be accompanied by an order protecting the property from disclosure by restricting the access of the applicant, including during the seizure, and prohibiting any copies, in whole or in part, of the seized property, to prevent undue damage to the party against whom the order has 

issued or others, until such parties have an opportunity to be heard in 

court; 

‘‘(iv) set a date for a hearing at the earliest possible time, and not 

later than 7 days after the order has issued, unless the party against 

whom the order is directed and others harmed by the order consent to 

another date for such hearing, except that a party against whom the 

order has issued or any person harmed by the order may move the 

court at any time to dissolve or modify the order after giving notice to 

the applicant who obtained the order; and 

‘‘(v) require the person obtaining the order to provide the security determined adequate by the court for the payment of such damages as 


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any person may be entitled to recover as a result of a wrongful or excessive seizure or wrongful or excessive attempted seizure under this 

paragraph. 

‘‘(C) PROTECTION FROM PUBLICITY.—The court shall take appropriate action to protect the person against whom an order under this paragraph is 

directed from publicity, by or at the behest of the person obtaining the 

order, about such order and any seizure under such order. 

‘‘(D) MATERIALS IN CUSTODY OF COURT.—Any materials seized under this 

paragraph shall be taken into the custody of the court. The court shall secure the seized material from physical and electronic access during the seizure and while in the custody of the court. 

‘‘(E) SERVICE OF ORDER.—The court shall order that service of a copy of 

the order under this paragraph shall be made by a Federal law enforcement 

officer, or may be made by a State or local law enforcement officer, who, 

upon making service, shall carry out the seizure under the order. 

‘‘(F) ACTION FOR DAMAGE CAUSED BY WRONGFUL SEIZURE.—A person who 

suffers damage by reason of a wrongful or excessive seizure under this 

paragraph has a cause of action against the applicant for the order under 

which such seizure was made, and shall be entitled to the same relief as 

is provided under section 34(d)(11) of the Trademark Act of 1946 (15 U.S.C. 

1116(d)(11)). The security posted with the court under subparagraph (B)(v) 

shall not limit the recovery of third parties for damages. 

‘‘(3) REMEDIES.—In a civil action brought under this subsection with respect 

to the misappropriation of a trade secret, a court may— 

‘‘(A) grant an injunction— 

‘‘(i) to prevent any actual or threatened misappropriation described 

in paragraph (1) on such terms as the court deems reasonable; 

‘‘(ii) if determined appropriate by the court, requiring affirmative actions to be taken to protect the trade secret; and 

‘‘(iii) in exceptional circumstances that render an injunction inequitable, that conditions future use of the trade secret upon payment of 

a reasonable royalty for no longer than the period of time for which 

such use could have been prohibited; 

‘‘(B) award— 

‘‘(i)(I) damages for actual loss caused by the misappropriation of the 

trade secret; and 

‘‘(II) damages for any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for 

actual loss; or 

‘‘(ii) in lieu of damages measured by any other methods, the damages 

caused by the misappropriation measured by imposition of liability for 

a reasonable royalty for the misappropriator’s unauthorized disclosure 

or use of the trade secret; 

‘‘(C) if the trade secret is willfully and maliciously misappropriated, 

award exemplary damages in an amount not more than 3 times the amount 

of the damages awarded under subparagraph (B); and 

‘‘(D) if a claim of the misappropriation is made in bad faith, a motion to 

terminate an injunction is made or opposed in bad faith, or the trade secret 

was willfully and maliciously misappropriated, award reasonable attorney’s 

fees to the prevailing party. 

‘‘(c) JURISDICTION.—The district courts of the United States shall have original jurisdiction of civil actions brought under this section. 

‘‘(d) PERIOD OF LIMITATIONS.—A civil action under subsection (b) may not be commenced later than 5 years after the date on which the misappropriation with respect to which the action would relate is discovered or by the exercise of reasonable 

diligence should have been discovered. For purposes of this subsection, a continuing 

misappropriation constitutes a single claim of misappropriation.’’. 

(b) DEFINITIONS.—Section 1839 of title 18, United States Code, is amended— 

(1) in paragraph (3), by striking ‘‘and’’ at the end; 

(2) in paragraph (4), by striking the period at the end and inserting a semicolon; and 

(3) by adding at the end the following: 

‘‘(5) the term ‘misappropriation’ means— 

‘‘(A) acquisition of a trade secret of another by a person who knows or 

has reason to know that the trade secret was acquired by improper means; 

or 

‘‘(B) disclosure or use of a trade secret of another without express or implied consent by a person who— 

‘‘(i) used improper means to acquire knowledge of the trade secret; 


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‘‘(ii) at the time of disclosure or use, knew or had reason to know that 

the knowledge of the trade secret was— 

‘‘(I) derived from or through a person who had used improper 

means to acquire the trade secret; 

‘‘(II) acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or 

‘‘(III) derived from or through a person who owed a duty to the 

person seeking relief to maintain the secrecy of the trade secret or 

limit the use of the trade secret; or 

‘‘(iii) before a material change of the position of the person, knew or 

had reason to know that— 

‘‘(I) the trade secret was a trade secret; and 

‘‘(II) knowledge of the trade secret had been acquired by accident 

or mistake; 

‘‘(6) the term ‘improper means’— 

‘‘(A) includes theft, bribery, misrepresentation, breach or inducement of 

a breach of a duty to maintain secrecy, or espionage through electronic or 

other means; and 

‘‘(B) does not include reverse engineering or independent derivation; and 

‘‘(7) the term ‘Trademark Act of 1946’ means the Act entitled ‘An Act to provide for the registration and protection of trademarks used in commerce, to 

carry out the provisions of certain international conventions, and for other purposes, approved July 5, 1946 (15 U.S.C. 1051 et seq.) (commonly referred to as 

the ‘‘Trademark Act of 1946’’ or the ‘‘Lanham Act’’)’.’’. 

(c) EXCEPTIONS TO PROHIBITION.—Section 1833 of title 18, United States Code, is 

amended, in the matter preceding paragraph (1), by inserting ‘‘or create a private 

right of action for’’ after ‘‘prohibit’’. 

(d) CONFORMING AMENDMENTS.— (1) The section heading for section 1836 of title 18, United States Code, is 

amended to read as follows: 

‘‘§ 1836. Civil proceedings’’. 

(2) The table of sections for chapter 90 of title 18, United States Code, is 

amended by striking the item relating to section 1836 and inserting the following: 

‘‘1836. Civil proceedings.’’. 

(e) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to any misappropriation of a trade secret (as defined in section 1839 of title 

18, United States Code, as amended by this section) for which any act occurs on 

or after the date of the enactment of this Act. 

(f) RULE OF CONSTRUCTION.—Nothing in the amendments made by this section 

shall be construed to modify the rule of construction under section 1838 of title 18, 

United States Code, or to preempt any other provision of law. 

(g) APPLICABILITY TO OTHER LAWS.—This section and the amendments made by 

this section shall not be construed to be a law pertaining to intellectual property 

for purposes of any other Act of Congress. 

SEC. 3. REPORT ON THEFT OF TRADE SECRETS OCCURRING ABROAD. 

(a) REPORTS.—Not later than 1 year after the date of the enactment of this Act, 

and biannually thereafter, the Attorney General, in consultation with the Intellectual Property Enforcement Coordinator, the Director, and the heads of other appropriate agencies, shall submit to the Committees on the Judiciary of the House of 

Representatives and the Senate, and make publicly available on the Web site of the 

Department of Justice and disseminate to the public through such other means as 

the Attorney General may identify, a report on the following: 

(1) The scope and breadth of the theft of the trade secrets of United States 

companies occurring outside of the United States. 

(2) The extent to which theft of trade secrets occurring outside of the United 

States is sponsored by foreign governments, foreign instrumentalities, or foreign 

agents. 

(3) The threat posed by theft of trade secrets occurring outside of the United 

States. 

(4) The ability and limitations of trade secret owners to prevent the misappropriation of trade secrets outside of the United States, to enforce any judgment 

against foreign entities for theft of trade secrets, and to prevent imports based 

on theft of trade secrets overseas. 

(5) A breakdown of the trade secret protections afforded United States companies by each country that is a trading partner of the United States and enforceVerDate Sep 11 2014 05:41 Dec 15, 2014 Jkt 049006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6621 E:\HR\OC\HR657.XXX HR657

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ment efforts available and undertaken in each such country, including a list 

identifying specific countries where trade secret theft, laws, or enforcement is 

a significant problem for United States companies. 

(6) Instances of the Federal Government working with foreign countries to investigate, arrest, and prosecute entities and individuals involved in the theft of 

trade secrets outside of the United States. 

(7) Specific progress made under trade agreements and treaties, including any 

new remedies enacted by foreign countries, to protect against theft of trade secrets of United States companies outside of the United States. 

(8) Recommendations of legislative and executive branch actions that may be 

undertaken to— 

(A) reduce the threat of and economic impact caused by the theft of the 

trade secrets of United States companies occurring outside of the United 

States; 

(B) educate United States companies regarding the threats to their trade 

secrets when taken outside of the United States; 

(C) provide assistance to United States companies to reduce the risk of 

loss of their trade secrets when taken outside of the United States; and 

(D) provide a mechanism for United States companies to confidentially or 

anonymously report the theft of trade secrets occurring outside of the 

United States. 

(b) DEFINITIONS.—In this section: 

(1) DIRECTOR.—The term ‘‘Director’’ means the Under Secretary of Commerce 

for Intellectual Property and Director of the United States Patent and Trademark Office. 

(2) FOREIGN INSTRUMENTALITY, ETC.—The terms ‘‘foreign instrumentality’’, 

‘‘foreign agent’’, and ‘‘trade secret’’ have the meanings given those terms in section 1839 of title 18, United States Code. 

(3) STATE.—The term ‘‘State’’ includes the District of Columbia and any commonwealth, territory, or possession of the United States. 

(4) UNITED STATES COMPANY.—The term ‘‘United States company’’ means an 

organization organized under the laws of the United States or a State or political subdivision thereof. 

Purpose and Summary 

H.R. 5233 amends the Economic Espionage Act of 1996 to provide a Federal civil remedy for the misappropriation of trade secrets, allowing trade secret owners to protect their innovations by 

seeking redress in Federal court, just as owners of other forms of 

intellectual property, including copyrights, patents, and trademarks, can seek remedies in Federal court for violations of their 

rights. The bill provides for equitable remedies and the award of 

damages for the misappropriation of a trade secret, and models its 

definition of ‘‘misappropriation’’ on the Uniform Trade Secrets Act. 

It also provides for expedited relief on an ex parte basis in the form 

of seizure of property from the party accused of misappropriation 

only if necessary to preserve evidence or prevent the dissemination 

of a trade secret. Any ex parte seizure order issued by a court must 

minimize any interruption to the business operations of third parties, protect the property seized from disclosure, and set a hearing 

date at the earliest possible time. The bill also provides sanctions 

for an erroneous seizure. 

Background and Need for the Legislation 

Trade secrets are the commercially valuable designs, processes, 

techniques and other forms of information kept confidential by 

companies because, by virtue of their secrecy, they give companies 

an edge in a competitive marketplace. Often developed at great cost 

and through years of research and development, trade secrets include manufacturing processes, proprietary technologies, industrial 

techniques, formulas, codes, designs, and customer lists. In a global 


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1 Report of the Commission of the Theft of American Intellectual Property, at 1, 10 (May 

2013), available at http://www.ipcommission.org/report/IP_Commission_Report_052213.pdf. 2See Trade Secrets: Promoting and Protecting American Innovation, Competitiveness and Market Access in Foreign Markets: Hearing Before the Subcomm. on Courts, Intellectual Property, 

and the Internet of the H. Comm. on the Judiciary, 113th Cong (2014), Statement of Richard 

Hertling, Of Counsel, Covington & Burling LLP, at 12; see also id., Statement of David M. 

Simon, Senior Vice President for Intellectual Property, salesforce.com, Inc., at 24–25; Statement 

of Thaddeus Burns, Senior Counsel, Intellectual Property & Trade, General Electric, on behalf 

of Intellectual Property Owners Association, at 36; Statement of Chris Moore, Senior Director, 

International Business Policy, National Association of Manufacturers, at 47. 3Dep’t of Defense, Strategy for Operating in Cyberspace, at 4 (July 2011), available at http:// 

www.defense.gov/news/d20110714cyber.pdf. 4 Josh Rogin, NSA Chief: Cybercrime Constitutes the ‘‘Greatest Transfer of Wealth in History,’’ 

The Cable, July 9, 2012, available at http://thecable.foreignpolicy.com/posts/2012/07/09/ nsa_chief_cybercrime_constitutes_the_greatest_transfer_of_wealth_in_history. 5 Center for Responsible Enterprise and Trade & PwC, Economic Impact of Trade Secret Theft: 

a Framework for Companies to Safeguard Trade Secrets and Mitigate Potential Threats, at 7– 

9 (February 2014), available at https://create.org/wp-content/uploads/2–14/07/CREATe.org-PwCTrade-Secret-Theft-FINAL-Feb-2014_01.pdf. 6 H.R. Rep. No. 112–610, Foreign and Economic Espionage Penalty Enhancement Act of 2012, 

at 1 (2012). 7 Economic Espionage Act of 1996, Pub. L. No. 104–294, 110 Stat. 3488 (1996). 

economy based on knowledge and innovation, trade secrets constitute some of any company’s most valuable property. 

The trade secrets of American companies are increasingly at risk 

for misappropriation by thieves looking for a quick payday or to 

replicate the market-leading innovations developed by trade secret 

owners. Using ever-more sophisticated means of attack, these 

thieves aim to steal the know-how that has made American industry the envy of the world. The Commission on the Theft of American Intellectual Property found that the illegal theft of intellectual 

property is undermining the means and incentive for entrepreneurs 

to innovate, slowing the development of new inventions and industries that could raise the prosperity and quality of life for everyone.1

The threat is significant: Trade secrets are an integral part of a 

company’s competitive advantage in today’s economy, and with the 

increased digitization of critical data and increased global trade, 

this information is highly susceptible to theft.2 The United States 

Department of Defense has found that every year, ‘‘an amount of 

intellectual property larger than that contained in the Library of 

Congress is stolen from networks maintained by U.S. businesses, 

universities, and government departments and agencies.’’ 3 General 

Keith Alexander, former head of the National Security Agency and 

U.S. Cyber Command, estimated that U.S. companies lose $250 billion per year due to the theft of their intellectual property.4 More 

recently, the Center for Responsible Enterprise and Trade, along 

with PwC, issued a report estimating that trade secret theft exacts 

a cost on U.S. companies of between one and 3 percent of GDP annually, roughly a cost of between $160 and $480 million each year.5

And in the last Congress, this Committee recognized the ‘‘significant and growing threat presented by criminals who engage in espionage on behalf of foreign adversaries and competitors.’’ 6

Companies have taken a number of measures to combat this 

threat, including strengthening their cybersecurity measures, 

encrypting key documents, examining their supply chains for weak 

points, employing strong contractual protections to safeguard their 

trade secrets in business relationships, and increasing the physical 

security of their plants and offices. When thefts do occur, companies turn to either state civil laws, which vary by jurisdiction, or 

the Federal Economic Espionage Act (‘‘EEA’’).7


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8 H.R. Rep. No. 104–788, Economic Espionage Act of 1996, at 4 (1996) 

The EEA, enacted in 1996 and codified at 18 U.S.C. §§ 1831 et 

seq., makes it a Federal criminal offense to misappropriate a trade 

secret that has an interstate or foreign nexus. This Committee’s 

Report on the EEA found that trade secrets form ‘‘an integral part 

of America’s economic well-being.’’ 8 As the first Federal statute to 

protect trade secrets, the EEA has enabled the FBI to investigate 

cases of trade secret theft, including, for example, the case of a 

former engineer at Ford Motor Co. who stole 4,000 documents and 

went to work at a competitor, causing losses to Ford estimated at 

$50 million. However, the FBI does not have the resources to investigate every case of trade secret theft. And the EEA, as a criminal 

statute, is not suited to making whole the victims of misappropriation. 

Companies facing a trade secret theft also turn to state trade secret laws, many of them based on the Uniform Trade Secrets Act 

(‘‘UTSA’’). While 48 states have adopted variations of the UTSA, 

the state laws vary in a number of ways and contain built-in limitations that make them not wholly effective in a national and global economy. First, they require companies to tailor costly compliance plans to meet each individual state’s law. Second, trade secret 

theft today is often not confined to a single state. The theft increasingly involves the movement of secrets across state lines, making 

it difficult for state courts to efficiently order discovery and service 

of process. Finally, trade secret cases often require swift action by 

courts across state lines to preserve evidence and keep a trade secret thief from boarding a plane and taking the secret beyond the 

reach of American law. In a globalized and national economy, Federal courts are better situated to address these concerns. 

America’s strength has always been found in the innovation and 

ingenuity of its people—its inventors, creators, engineers, designers, developers, and doers. American businesses that compete globally will lose their competitive edge if they cannot quickly pursue 

and stop thieves looking to shortcut the innovative products, designs, and processes that have fueled our economy. This bill will 

equip companies with the additional tools they need to protect their 

proprietary information, to preserve and increase jobs and promote 

growth in the United States, and to continue to lead the world in 

creating new and innovative products, technologies, and services. 

Hearings 

The Committee held an oversight hearing on ‘‘Trade Secrets: Promoting and Protecting American Innovation, Competitiveness and 

Market Access in Foreign Markets’’ on June 24, 2014. The Committee heard testimony from Mr. Thaddeus Burns, Senior Counsel, 

Intellectual Property & Trade, General Electric; Mr. Richard A. 

Hertling, Of Counsel, Covington & Burling LLP, on behalf of the 

Protect Trade Secrets Coalition; Mr. Christopher Moore, Senior Director, International Business Policy, National Association of Manufacturers; and Mr. David Simon, Senior Vice President, Intellectual Property, Salesforce.com. 


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Committee Consideration 

On September 17, 2014, the Committee met in open session and 

ordered the bill H.R. 5233 favorably reported with an amendment, 

by voice vote, a quorum being present. 

Committee Votes 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that there were 

no recorded votes during the Committee’s consideration of H.R. 

5233. 

Committee Oversight Findings 

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

New Budget Authority and Tax Expenditures 

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 

Congressional Budget Office Cost Estimate 

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 5233, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, November 25, 2014. 

Hon. BOB GOODLATTE, CHAIRMAN, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 5233, the ‘‘Trade Secrets 

Protection Act of 2014.’’ 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Martin von Gnechten, 

who can be reached at 226–2860. 

Sincerely, 

DOUGLAS W. ELMENDORF, DIRECTOR. 

Enclosure 

cc: Honorable John Conyers, Jr. 

Ranking Member 


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H.R. 5233—Trade Secrets Protection Act of 2014. 

As ordered reported by the House Committee on the Judiciary 

on September 17, 2014. 

H.R. 5233 would establish a Federal remedy for individuals seeking relief from the misappropriation of trade secrets. Under the 

bill, an owner of a trade secret could file a civil action in a district 

court, and the court may issue an order to seize any property necessary to preserve evidence for the civil action. The legislation 

would require the Department of Justice (DOJ) to submit periodic 

reports on theft of trade secrets in the United States. 

Based on information provided by the DOJ and the Administrative Office of the U.S. Courts, CBO estimates that implementing 

H.R. 5233 would have no significant effect on the Federal budget. 

Enacting H.R. 5233 would affect direct spending and revenues; 

therefore, pay-as-you-go procedures apply. Specifically, the bill 

would affect civil court filing fees, which are recorded in the budget 

as revenues. A portion of those revenues would be spent without 

further appropriation. However, CBO estimates that the net budget 

effect would be insignificant for each year and over the 2015–2024 

period. 

H.R. 5233 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Martin von Gnechten. 

The estimate was approved by Theresa Gullo, Deputy Assistant Director for Budget Analysis. 

Duplication of Federal Programs 

No provision of H.R. 5233 establishes or reauthorizes a program 

of the Federal Government known to be duplicative of another Federal program, a program that was included in any report from the 

Government Accountability Office to Congress pursuant to section 

21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

Disclosure of Directed Rule Makings 

The Committee estimates that H.R. 5233 specifically directs to be 

completed no specific rule makings within the meaning of 5 U.S.C. 

551. 

Performance Goals and Objectives 

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 5233 will provide for civil jurisdiction in Federal court for the misappropriation 

of a trade secret, providing companies with an essential tool to prevent the disclosure of their valuable trade secrets and to obtain equitable remedies and damages in the event of trade secret theft. 

Advisory on Earmarks 

In accordance with clause 9 of rule XXI of the Rules of the House 

of Representatives, H.R. 5233 does not contain any congressional 


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earmarks, limited tax benefits, or limited tariff benefits as defined 

in clause 9(e), 9(f), or 9(g) of Rule XXI. 

Section-by-Section Analysis 

The following discussion describes the bill as reported by the 

Committee. 

Section 1. Short Title. 

Section 1 provides that the short title of H.R. 5233 is the ‘‘Trade 

Secrets Protection Act of 2014.’’ 

Sec. 2. Federal Jurisdiction for Theft of Trade Secrets. 

Section 2(a) amends § 1836 of title 18 by striking subsection (b) 

(which provides for Federal district courts to have exclusive jurisdiction over civil actions brought by the Attorney General for trade 

secret misappropriation) and creating a Federal civil remedy for 

trade secret misappropriation. 

In General. 

The new § 1836(b) in paragraph (1) authorizes a trade secret 

owner to bring a civil action for the misappropriation of a trade secret that is related to a product or service used in, or intended for 

use in, interstate or foreign commerce. The jurisdictional interstate 

or foreign commerce language is identical to the existing language 

required for Federal jurisdiction over a crime involving the theft of 

a trade secret under § 1832(a). 

Civil Seizure. 

The new § 1836(b) in paragraph (2) authorizes a court to issue an 

order, and upon an ex parte application based on an affidavit or 

verified complaint, for seizure of property necessary to preserve evidence or to prevent the propagation or dissemination of the trade 

secret. Subparagraph (A) contains numerous limitations, described 

below, and is not intended to affect the inherent authority of the 

Federal courts. It also does not affect the authority of the court to 

issue appropriate orders pursuant to Rule 65 of the Federal Rules 

of Civil Procedure. 

In clause (ii) of paragraph (2), the legislation instructs that the 

court may not grant a seizure order unless it finds that it clearly 

appears from specific facts that (I) a temporary restraining order 

issued pursuant to Federal Rule of Civil Procedure 65(b) would be 

inadequate because the party to which the order would be issued 

would evade, avoid, or otherwise not comply; (II) immediate and irreparable injury will occur if the seizure is not ordered; (III) the 

harm to the applicant of denying the application outweighs the 

harm to the legitimate interests of the person against whom the 

seizure is ordered and substantially outweighs the harm to any 

third parties; (IV) the applicant is likely to succeed in showing that 

the person against whom the seizure is ordered misappropriated 

the trade secret by improper means, or conspired to use improper 

means, and is in possession of it; (V) the applicant describes with 

reasonable particularity the matter to be seized and, to the extent 

reasonable, identifies the location where the matter is to be seized; 

(VI) the person against whom the seizure would be ordered, or 

those working in concert with that person, would destroy, move, 


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hide, or otherwise make such matter inaccessible if the applicant 

were to provide that person notice; and (VII) the applicant has not 

publicized the requested seizure. 

The Committee expects that courts will require applicants for ex 

parte seizure orders to describe the trade secret that would be the 

subject of the order with sufficient particularity for the court to 

evaluate the request. The requirement in subclause (IV) protects 

third-parties from seizure. For instance, the operator of a server on 

which another party has stored a misappropriated trade secret, or 

online an intermediary such as an Internet service provider, would 

not be subject to seizure because that party did not misappropriate 

the trade secret. The court may decide to issue an injunction preventing disclosure of the trade secret, but not a seizure order under 

this provision. The requirement in that subclause relating to improper means is intended to prevent the seizure provision from 

being used against a party who may know it is in possession of a 

trade secret that was misappropriated, but did not use or conspire 

to use improper means to acquire it. The subclause is flexible 

enough, however, to allow seizure of a trade secret stolen by one 

party and handed off to an accomplice. 

Subparagraph (B) of new § 1836(b)(2) further provides that a seizure order shall (i) set forth findings of fact and conclusions of law 

required for the order; (ii) provide for the seizure in a manner that 

minimizes any interruption of the business operations of third parties and, to the extent possible, does not interrupt the legitimate, 

unrelated business operations of the person accused of misappropriating the trade secret; (iii) be accompanied by an order protecting the seized property from disclosure by restricting the access 

of the applicant and prohibiting any copies of the seized property; 

(iv) set a date for a hearing at the earliest possible time, and no 

later than 7 days after the order has issued; and (v) require the 

person obtaining the order to provide the security determined adequate by the court for payment of such damages as a person may 

be entitled to recover as a result of a wrongful or excessive seizure. 

Subparagraph (C) of new § 1836(b)(2) requires a court, in issuing 

a seizure order, to take appropriate action to protect the target of 

the order from publicity about the order and seizure. Subparagraph 

(D) provides that any materials seized shall be taken into the custody of the court, which shall secure the material from physical and 

electronic access. The court, in implementing this subparagraph, 

should be careful to keep, for instance, any electronic data secure 

and not connected to a device that may be connected to the Internet and therefore susceptible to cyberattacks. Subparagraph (E) requires the order to be carried out by a law enforcement officer. 

Subparagraph (F) provides that a person who suffers damage by 

reason of a wrongful or excessive seizure has a cause of action 

against the applicant to recover damages, including punitive damages, and a reasonable attorney’s fee. 

Remedies. 

Paragraph (3) of new § 1836(b) provides the remedies for the misappropriation of a trade secret. Subparagraph (A) specifies the equitable relief available and comes directly from § 2 of the UTSA. A 

court may grant an injunction to prevent any actual or threatened 

misappropriation. A court may require affirmative actions to be 


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9The Committee is cognizant, for instance, that courts interpreting state trade secret laws 

have reached different conclusions on the applicability of the inevitable disclosure doctrine. 

Compare PepsiCo, Inc. v. Redmond, 54 F.3d 1262, 1269 (7th Cir. 1995) (‘‘[A] plaintiff may prove 

a claim of trade secret misappropriation by demonstrating that [the] defendant’s new employment will inevitably lead him to rely on the plaintiff’s trade secrets’’), with Whyte v. Schlage 

Lock Co., 125 Cal. Rptr. 2d 277, 281 (Ct. App. 2002) (rejecting explicitly the inevitable disclosure 

doctrine under California law). The Committee does not intend this legislation to affect the development of this doctrine. 

taken to protect the trade secret. And, in exceptional circumstances 

that render an injunction inequitable, a court may condition future 

use of the trade secret upon payment of reasonable royalties. 

Subparagraph (B) specifies the damage award that a court may 

issue and comes directly from § 3 of the UTSA. This subparagraph 

authorizes an award of damages for the actual loss and any unjust 

enrichment caused by the misappropriation, or, in lieu of damages 

calculated by any other method, an award of a reasonable royalty. 

Subparagraph (C) authorizes an award of exemplary damages if 

the trade secret is willfully and maliciously misappropriated. This 

provision is similar to § 3(b) of the UTSA, which authorizes an 

award not exceeding twice the damages awarded for willful and 

malicious misappropriation. The Committee included treble damages, rather than double, for consistency with the patent laws—section 284 of title 35, in the second undesignated paragraph—and the 

trademark laws—section 35(b) of the Lanham Act—both of which 

authorize treble damages for willful infringement. 

Subparagraph (D) authorizes an award of attorney’s fees to the 

prevailing party if a claim of misappropriation is made in bad faith, 

there is willful and malicious infringement, or a motion to terminate an injunction is made or opposed in bad faith. This provision 

comes directly from § 4 of the UTSA. 

Jurisdiction. 

Subsection (c) of new § 1836 is identical to current subsection (b), 

which provides that the district courts of the United States shall 

have original jurisdiction of civil actions brought under the section. 

Period of Limitations. 

Subsection (d) of new § 1836 provides a 5-year period of limitations in which to bring a claim under the section. 

Additional Provisions. 

Section 2(b) of the Act amends § 1839 to add three new definitions. 

First, the subsection includes a definition of ‘‘misappropriation’’ 

that is identical in all relevant respects to the definition of misappropriation in § 1(2) of the UTSA. The Committee intentionally 

used this established definition to make clear the Committee is not 

intending to alter the balance of current trade secret law or alter 

specific court decisions.9

Second, the subsection includes a definition of ‘‘improper means.’’ 

This definition in subparagraph (A) is identical to the definition in 

the § 1(1) of the UTSA. The Committee included a subparagraph 

(B) to clarify that reverse engineering and independent derivation 

of the secret do not constitute improper means. 


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Third, the subsection defines ‘‘Trademark Act of 1946’’, which 

provides the basis for recovery by a person harmed by a wrongful 

or excessive seizure. 

Section 2(c) of the Act ensures that nothing in the legislation is 

read to create a cause of action for conduct of a governmental entity or for reporting a suspected violation of law to a governmental 

entity. 

Section 2(d) of the Act is a conforming amendment to update the 

title of section 1836 in the section heading and table of sections 

based on the changes made by this Act. 

Section 2(e) of the Act sets the effective date for the amendments 

made by section 2 of the Act. The amendments shall apply to any 

misappropriation for which any act occurs on or after the date of 

enactment of the Act. 

Section 2(f) of the Act clarifies that nothing in this Act modifies 

the rule of construction in § 1838 and, therefore, state trade secret 

law is not preempted and nothing affects an otherwise lawful disclosure under the Freedom of Information Act. 

Section 2(g) of the Act also specifies that the new civil remedy 

created by this Act will not be an additional exception to protections provided to certain online services. This section has no impact 

on whether pre-existing law related to trade secrets at the state or 

Federal level are laws pertaining to intellectual property and therefore exceptions to those protections. 

Sec. 3. Report on Theft of Trade Secrets Occurring Abroad. 

Section 3 of the Act requires a biannual report by the Attorney 

General, in consultation with the Intellectual Property Enforcement Coordinator, the Director of the United States Patent and 

Trademark Office, and the heads of other appropriate agencies, on: 

(1) the scope of trade secret theft from United States companies 

that occurs outside the United States; 

(2) the extent to which trade secret theft outside of the United 

States is sponsored by foreign entities; 

(3) the threat posed by trade secret theft outside the United 

States; 

(4) the ability and limitations of trade secret owners to prevent 

trade secret misappropriation outside of the United States, to enforce judgment against foreign entities for such theft, and to prevent imports based on theft of trade secrets overseas; 

(5) the trade secret protections afforded United States companies 

by trading partners of the United States and specific information 

about enforcement efforts available and undertaken in each such 

country; 

(6) instances of the Federal Government working with foreign 

countries to investigate, arrest, and prosecute entities and individuals involved in the theft of trade secrets outside of the United 

States; 

(7) specific progress made under trade agreements and treaties 

to protect United States companies from trade secret theft outside 

the United States; and 

(8) recommendations of legislative and executive branch actions 

that may be undertaken to (A) reduce the threat of and economic 

impact caused by the theft of the trade secrets of United States 

companies occurring outside of the United States; (B) educate 


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United States companies regarding threats to their trade secrets 

when taken outside of the United States; (C) provide assistance to 

United States companies to reduce the risk of loss of their trade 

secrets when taken outside of the United States; and (D) provide 

a mechanism for United States companies to confidentially or 

anonymously report the theft of trade secrets occurring outside the 

United States. 

Changes in Existing Law Made by the Bill, as Reported 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

existing law in which no change is proposed is shown in roman): 

TITLE 18, UNITED STATES CODE 

* * * * * * * 

PART I—CRIMES 

* * * * * * * 

CHAPTER 90—PROTECTION OF TRADE SECRETS 

Sec. 

1831. Economic espionage. 

* * * * * * * 

ø1836. Civil proceedings to enjoin violations.¿ 

1836. Civil proceedings. 

* * * * * * * 

§ 1833. Exceptions to prohibitions 

This chapter does not prohibit or create a private right of action for— 

(1) * * * 

* * * * * * * 

§ 1836. øCivil proceedings to enjoin violations¿ Civil proceedings 

(a) * * * 

ø(b) The district courts of the United States shall have exclusive original jurisdiction of civil actions under this section.¿ 

(b) PRIVATE CIVIL ACTIONS.— 

(1) IN GENERAL.—An owner of a trade secret may bring a 

civil action under this subsection if the person is aggrieved by 

a misappropriation of a trade secret that is related to a product 

or service used in, or intended for use in, interstate or foreign 

commerce. 

(2) CIVIL SEIZURE.— (A) IN GENERAL.— 

(i) APPLICATION.—Based on an affidavit or verified 

complaint satisfying the requirements of this paraVerDate Sep 11 2014 05:41 Dec 15, 2014 Jkt 049006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6603 E:\HR\OC\HR657.XXX HR657

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graph, the court may, upon ex parte application, issue 

an order providing for the seizure of property necessary 

to preserve evidence in a civil action brought under 

paragraph (1) or to prevent the propagation or dissemination of the trade secret that is the subject of the action. 

(ii) REQUIREMENTS FOR ISSUING ORDER.—The 

court may not grant an application under clause (i) unless the court finds that it clearly appears from specific 

facts that— 

(I) an order issued pursuant to Rule 65(b) of 

the Federal Rules of Civil Procedure would be inadequate to achieve the purpose of this paragraph 

because the party to which the order would be 

issued would evade, avoid, or otherwise not comply 

with such an order; 

(II) an immediate and irreparable injury will 

occur if such seizure is not ordered; 

(III) the harm to the applicant of denying the 

application outweighs the harm to the legitimate 

interests of the person against whom seizure would 

be ordered of granting the application and substantially outweighs the harm to any third parties 

who may be harmed by such seizure; 

(IV) the applicant is likely to succeed in showing that the person against whom seizure would be 

ordered misappropriated the trade secret by improper means, or conspired to use improper means 

to misappropriate the trade secret, and is in possession of the trade secret; 

(V) the application describes with reasonable 

particularity the matter to be seized and, to the extent reasonable under the circumstances, identifies 

the location where the matter is to be seized; 

(VI) the person against whom seizure would be 

ordered, or persons acting in concert with such 

person, would destroy, move, hide, or otherwise 

make such matter inaccessible to the court, if the 

applicant were to proceed on notice to such person; 

and 

(VII) the applicant has not publicized the requested seizure. 

(B) ELEMENTS OF ORDER.—If an order is issued under 

subparagraph (A), it shall— 

(i) set forth findings of fact and conclusions of law 

required for the order; 

(ii) provide for the seizure of any property in a 

manner that minimizes any interruption of the business operations of third parties and, to the extent possible, does not interrupt those legitimate business operations of the person accused of misappropriating the 

trade secret that are unrelated to the trade secret that 

has allegedly been misappropriated; 

(iii) be accompanied by an order protecting the 

property from disclosure by restricting the access of the 


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applicant, including during the seizure, and prohibiting any copies, in whole or in part, of the seized property, to prevent undue damage to the party against 

whom the order has issued or others, until such parties 

have an opportunity to be heard in court; 

(iv) set a date for a hearing at the earliest possible 

time, and not later than 7 days after the order has 

issued, unless the party against whom the order is directed and others harmed by the order consent to another date for such hearing, except that a party against 

whom the order has issued or any person harmed by 

the order may move the court at any time to dissolve 

or modify the order after giving notice to the applicant 

who obtained the order; and 

(v) require the person obtaining the order to provide the security determined adequate by the court for 

the payment of such damages as any person may be entitled to recover as a result of a wrongful or excessive 

seizure or wrongful or excessive attempted seizure 

under this paragraph. 

(C) PROTECTION FROM PUBLICITY.—The court shall 

take appropriate action to protect the person against whom 

an order under this paragraph is directed from publicity, 

by or at the behest of the person obtaining the order, about 

such order and any seizure under such order. 

(D) MATERIALS IN CUSTODY OF COURT.—Any materials 

seized under this paragraph shall be taken into the custody 

of the court. The court shall secure the seized material from 

physical and electronic access during the seizure and while 

in the custody of the court. 

(E) SERVICE OF ORDER.—The court shall order that 

service of a copy of the order under this paragraph shall be 

made by a Federal law enforcement officer, or may be made 

by a State or local law enforcement officer, who, upon making service, shall carry out the seizure under the order. 

(F) ACTION FOR DAMAGE CAUSED BY WRONGFUL SEIZURE.—A person who suffers damage by reason of a wrongful or excessive seizure under this paragraph has a cause 

of action against the applicant for the order under which 

such seizure was made, and shall be entitled to the same 

relief as is provided under section 34(d)(11) of the Trademark Act of 1946 (15 U.S.C. 1116(d)(11)). The security 

posted with the court under subparagraph (B)(v) shall not 

limit the recovery of third parties for damages. 

(3) REMEDIES.—In a civil action brought under this subsection with respect to the misappropriation of a trade secret, a 

court may— 

(A) grant an injunction— 

(i) to prevent any actual or threatened misappropriation described in paragraph (1) on such terms as 

the court deems reasonable; 

(ii) if determined appropriate by the court, requiring affirmative actions to be taken to protect the trade 

secret; and 


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(iii) in exceptional circumstances that render an 

injunction inequitable, that conditions future use of the 

trade secret upon payment of a reasonable royalty for 

no longer than the period of time for which such use 

could have been prohibited; 

(B) award— 

(i)(I) damages for actual loss caused by the misappropriation of the trade secret; and 

(II) damages for any unjust enrichment caused by 

the misappropriation of the trade secret that is not addressed in computing damages for actual loss; or 

(ii) in lieu of damages measured by any other 

methods, the damages caused by the misappropriation 

measured by imposition of liability for a reasonable 

royalty for the misappropriator’s unauthorized disclosure or use of the trade secret; 

(C) if the trade secret is willfully and maliciously misappropriated, award exemplary damages in an amount not 

more than 3 times the amount of the damages awarded 

under subparagraph (B); and 

(D) if a claim of the misappropriation is made in bad 

faith, a motion to terminate an injunction is made or opposed in bad faith, or the trade secret was willfully and 

maliciously misappropriated, award reasonable attorney’s 

fees to the prevailing party. 

(c) JURISDICTION.—The district courts of the United States shall 

have original jurisdiction of civil actions brought under this section. 

(d) PERIOD OF LIMITATIONS.—A civil action under subsection (b) 

may not be commenced later than 5 years after the date on which 

the misappropriation with respect to which the action would relate 

is discovered or by the exercise of reasonable diligence should have 

been discovered. For purposes of this subsection, a continuing misappropriation constitutes a single claim of misappropriation. 

* * * * * * * 

§ 1839. Definitions 

As used in this chapter— 

(1) * * * 

* * * * * * * 

(3) the term ‘‘trade secret’’ means all forms and types of financial, business, scientific, technical, economic, or engineering 

information, including patterns, plans, compilations, program 

devices, formulas, designs, prototypes, methods, techniques, 

processes, procedures, programs, or codes, whether tangible or 

intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or 

in writing if— 

(A) * * * 

(B) the information derives independent economic 

value, actual or potential, from not being generally known 

to, and not being readily ascertainable through proper 

means by, the public; øand¿ 


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(4) the term ‘‘owner’’, with respect to a trade secret, means 

the person or entity in whom or in which rightful legal or equitable title to, or license in, the trade secret is reposedø.¿; 

(5) the term ‘‘misappropriation’’ means— 

(A) acquisition of a trade secret of another by a person 

who knows or has reason to know that the trade secret was 

acquired by improper means; or 

(B) disclosure or use of a trade secret of another without express or implied consent by a person who— 

(i) used improper means to acquire knowledge of 

the trade secret; 

(ii) at the time of disclosure or use, knew or had 

reason to know that the knowledge of the trade secret 

was— 

(I) derived from or through a person who had 

used improper means to acquire the trade secret; 

(II) acquired under circumstances giving rise 

to a duty to maintain the secrecy of the trade secret 

or limit the use of the trade secret; or 

(III) derived from or through a person who 

owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use 

of the trade secret; or 

(iii) before a material change of the position of the 

person, knew or had reason to know that— 

(I) the trade secret was a trade secret; and 

(II) knowledge of the trade secret had been acquired by accident or mistake; 

(6) the term ‘‘improper means’’— 

(A) includes theft, bribery, misrepresentation, breach or 

inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; and 

(B) does not include reverse engineering or independent 

derivation; and 

(7) the term ‘‘Trademark Act of 1946’’ means the Act entitled ‘‘An Act to provide for the registration and protection of 

trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes, approved July 5, 1946 (15 U.S.C. 1051 et seq.) (commonly referred 

to as the ‘Trademark Act of 1946’ or the ‘Lanham Act’)’’. 

* * * * * * * 

Æ 


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