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[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

 
                       SAFEGUARDING TRADE SECRETS
                          IN THE UNITED STATES

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                     COURTS, INTELLECTUAL PROPERTY,
                            AND THE INTERNET

                                 of the

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 17, 2018

                               __________

                           Serial No. 115-71

                               __________

         Printed for the use of the Committee on the Judiciary
         
         
         
         
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]         

      Available via the World Wide Web: http://judiciary.house.gov
      
      
      
                            _________ 

                U.S. GOVERNMENT PUBLISHING OFFICE
                   
 32-940                 WASHINGTON : 2018            
      
      
                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JERROLD NADLER, New York
    Wisconsin                        ZOE LOFGREN, California
LAMAR SMITH, Texas                   SHEILA JACKSON LEE, Texas
STEVE CHABOT, Ohio                   STEVE COHEN, Tennessee
DARRELL E. ISSA, California          HENRY C. ``HANK'' JOHNSON, Jr., 
STEVE KING, Iowa                         Georgia
LOUIE GOHMERT, Texas                 THEODORE E. DEUTCH, Florida
JIM JORDAN, Ohio                     LUIS V. GUTIERREZ, Illinois
TED POE, Texas                       KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC L. RICHMOND, Louisiana
TREY GOWDY, South Carolina           HAKEEM S. JEFFRIES, New York
RAUL LABRADOR, Idaho                 DAVID CICILLINE, Rhode Island
BLAKE FARENTHOLD, Texas              ERIC SWALWELL, California
DOUG COLLINS, Georgia                TED LIEU, California
RON DeSANTIS, Florida                JAMIE RASKIN, Maryland
KEN BUCK, Colorado                   PRAMILA JAYAPAL, Washington
JOHN RATCLIFFE, Texas                BRAD SCHNEIDER, Illinois
MARTHA ROBY, Alabama                 VALDEZ VENITA ``VAL'' DEMINGS, 
MATT GAETZ, Florida                      Florida
MIKE JOHNSON, Louisiana
ANDY BIGGS, Arizona
JOHN RUTHERFORD, Florida
KAREN HANDEL, Florida
KEITH ROTHFUS, Pennsylvania

          Shelley Husband, Chief of Staff and General Counsel
       Perry Apelbaum, Minority Staff Director and Chief Counsel

                                 ------                                

    Subcommittee on Courts, Intellectual Property, and the Internet

                 DARRELL E. ISSA, California, Chairman
                  DOUG COLLINS, Georgia, Vice-Chairman
LAMAR SMITH, Texas                   HENRY C. ``HANK'' JOHNSON, Jr., 
STEVE CHABOT, Ohio                       Georgia
JIM JORDAN, Ohio                     THEODORE E. DEUTCH, Florida
TED POE, Texas                       KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC L. RICHMOND, Louisiana
TREY GOWDY, South Carolina           HAKEEM S. JEFFRIES, New York
RAUL LABRADOR, Idaho                 ERIC SWALWELL, California
BLAKE FARENTHOLD, Texas              TED LIEU, California
RON DeSANTIS, Florida                BRAD SCHNEIDER, Illinois
MATT GAETZ, Florida                  ZOE LOFGREN, California
ANDY BIGGS, Arizona                  STEVE COHEN, Tennessee
                                     DAVID CICILLINE, Rhode Island
                                     PRAMILA JAYAPAL, Washington
                                     
                                     
                            C O N T E N T S

                              ----------                              

                             APRIL 17, 2018
                           OPENING STATEMENTS

                                                                   Page
The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the 
  Judiciary......................................................     3
The Honorable Darrell Issa, California, Chairman, Subcommittee on 
  Courts, Intellectual Property, and the Internet, Committee on 
  the Judiciary..................................................     1
The Honorable Jerrold Nadler, New York, Ranking Member, Committee 
  on the Judiciary...............................................     4
The Honorable Henry C. ``Hank'' Johnson Jr., Georgia, Ranking 
  Member, Subcommittee Courts, Intellectual Property, and the 
  Internet, Committee on the Judiciary...........................     3

                               WITNESSES

Mr. Kenneth R. Corsello, Chair, Trade Secrets Committee, 
  Intellectual Property Owners Association
    Oral Statement...............................................     6
Mr. James H. Pooley, James Pooley, PLC
    Oral Statement...............................................     8
Mr. David S. Almeling, Partner, O'Melveny & Myers LLP
    Oral Statement...............................................     9

            SAFEGUARDING TRADE SECRETS IN THE UNITED STATES

                              ----------                              

                        TUESDAY, APRIL 17, 2018

                        House of Representatives

                       Committee on the Judiciary

    Subcommittee on Courts, Intellectual Property, and the Internet

                            Washington, DC.

    The subcommittee met, pursuant to call, at 2:00 p.m., in 
Room 2141, Rayburn House Office Building, Hon. Darrell Issa 
[chairman of the subcommittee] presiding.
    Present: Representatives Issa, Goodlatte, Collins, Chabot, 
DeSantis, Johnson of Georgia, Nadler, Schneider, and Lofgren.
    Staff Present: Tom Stoll, Counsel; Eric Bagwell, Clerk; 
Jason Everett, Minority Counsel; David Greengrass, Minority 
Senior Counsel; and Veronica Eligan, Minority Professional 
Staff Member.
    Mr. Issa. Good morning. The ranking member will be here 
shortly, well before his opening statement. So, I am going to 
move this along. We do not know whether we will break at 2:30 
for the classified briefing. The assumption right now is we 
will work through it and members will come and go. So, with 
that.
    The subcommittee on Subcommittee on Courts, Intellectual 
Property, and the Internet will now come to order. Without 
objection, the chair is authorized to declare recesses of the 
subcommittee at any time. We welcome everyone here today for 
this hearing on Safeguarding Trade Secrets in the United 
States. I will now recognize myself for an opening statement.
    Trade secrets are, by definition, commercially valuable 
designs, processes, techniques, and other forms of information 
that provide a competitive advantage in a marketplace when kept 
a closely held secret, often developed at great cost and 
through many years of research.
    Trade secrets drive investments in research and technology 
and often are key innovation for growth. Often, a trade secret 
lies in plain sight to those who are entrusted to work with 
that. Famously, the Coca-Cola recipe is not in a vault, but in 
fact, anyone producing the product would see each and every 
ingredient and in what proportions.
    Economists estimate that trade secrets comprise roughly 
two-thirds of the value of companies' intellectual property 
portfolios. And that they are important to success for 
businesses, large and small. Something as simple as a small 
company being able to simply work 2 or 3 percent more efficient 
in something as simple as dry cleaning or in the preparation of 
meals can give a competitive advantage.
    In a large company, it could be a fraction of a percent of 
efficiency in some commodity that could give somebody the 
ability to make a profit. While somebody else is only able to 
break even.
    And during the 112th Congress, we passed the America 
Invents Act to address patent litigation abuse and to respond 
to calls for stopping patent trolling. Our efforts to address 
patent trolling have been a vital resource to a rebounding 
success, although it is still a work in process.
    With that unquestionable success on the patent front, 
companies developing new technologies are now more and more 
turning to trade secret laws to protect their most valuable 
technologies. The DTSA provided certain tools for a United 
States company to protect their trade secrets while creating a 
Federal civil remedy for trade secret misappropriation.
    The trade secrets misappropriation, though, is limited and, 
in fact, depends on quick action in many cases by those who 
have had their secrets stolen. Today we will evaluate, among 
other things, is the DTSA working as intended and what else can 
Congress do?
    Unfortunately, even after the enhancement of the DTSA, 
thieves are still absconding with digital stacks of 
information, documents containing the most prized trade secrets 
of our companies. This hearing will help us to ensure that the 
DTSA is working as intended or that we consider remedies to 
make it work as we planned.
    One particular area is closing the discovery loophole to 
safeguarding trade secrets. What we call the discovery loophole 
for today is a concern under 28 U.S.C. section 1782. The 
section 1782 portion of the statute allows foreign entities 
with merely an interest in foreign litigation to compel 
discovery in the United States. U.S. companies argue that the 
U.S. courts have interpreted section 1782 more broadly than 
they should have.
    They argue that foreign companies engaged in technology-
relevant litigation have been using section 1782 to obtain 
information--and I want you to hear this carefully--that they 
could not have obtained in their home court. Again, under 
section 1782, companies in foreign domiciles are, in fact, 
gaining discovery they could not have gained in their home 
country. And that statute provides no protection to safeguard 
trade secrets of U.S. companies.
    The assumption, of course, is when you go in to a 
litigation in the United States, as a matter of routine a 
protective order would be granted for a great many things. Not 
just trade secrets but profits, losses, names of individuals, 
or even simply what your profit margin is on an item can be 
protected. And yet, currently, defendants cannot go into court 
with any assurance that they will have similar protections from 
a suit, not in the U.S., but in a foreign country who, by 
definition, would be thought to have less right to your 
intellectual property rather than more.
    It is possible that this could be corrected by court 
action. It is possible that it could be corrected by 
administrative action. And it is possible that we will have to 
correct it by the action of this committee and the Congress. 
And with that, I recognize the ranking member, as promised, for 
his opening statement.
    Mr. Johnson of Georgia. Thank you, Mr. Chairman. Ladies and 
gentlemen, today we will examine whether trade secret laws have 
been adequately protecting United States companies and whether 
the Defend Trade Secrets Act has been working effectively. 
Trade secrets provide a valuable competitive advantage in the 
marketplace and often require companies to invest great sums of 
money for research and development.
    Trade secrets make up a major part of today's economy, and 
thus, are susceptible to theft. Digitization of critical data 
and the use of computer technologies and mobile devices have 
made the theft of trade secrets easier. There are many examples 
of trade secrets, such as customer lists, manufacturing 
techniques, and confidential formulas. One of the most well-
known being the formula for Coca-Cola.
    According to the Commission on the Theft of American 
Intellectual Property, trade secrets theft cost the U.S. 
economy between $180 billion and $540 billion a year. This fact 
demonstrates how much of a financial loss trade secret theft 
can have, not just on U.S. companies, but also on the entire 
U.S. economy. And also demonstrates why it is so critical that 
we work to protect trade secrets.
    In 2016, Congress passed the Defend Trade Secrets Act, 
which created a Federal civil cause of action for the 
misappropriation of trade secrets. Prior to enactment of this 
bill, trade secrets were protected through State 
interpretations and selective application of provisions in the 
Uniform Trade Secrets Act. Since the DTSA was enacted, there 
have been hundreds of cases filed. It appears that the law is 
allowing companies to recover for the theft of trade secrets by 
competitors.
    Today we are interested in hearing from the witnesses about 
whether Congress needs to do more to help companies protect 
their trade secrets. And we want to hear from the witnesses 
about whether the Defend Trade Secrets Act is working as it was 
intended, whether it is providing adequate protections, and 
whether there may be more that Congress can do to prevent 
future trade secret theft from U.S. companies and if so, what 
approach should Congress take? I look forward to hearing from 
the witnesses, and thank the chairman for holding this hearing, 
and I yield back the balance of my time.
    Mr. Issa. I thank the gentleman. We now recognize the 
chairman of the full committee, the gentleman from Virginia, 
Mr. Goodlatte.
    Chairman Goodlatte. Well, thank you, Mr. Chairman. For the 
last several years, the House Judiciary Committee has been 
working tirelessly to protect American innovators' inventions 
while also ensuring that companies are free to innovate without 
fear of being harassed. One form of invention that deserves 
strong protection is trade secrets.
    Trade secrets are the formulas, algorithms, and recipes 
that give companies an edge over their competition, like the 
recipes that make Little Debbie Oatmeal Creme Pies and 
Hershey's Heath Bars so delicious. Roald Dahl's fictional 
Willie Wonka character and his ``everlasting gobstopper'' teach 
even children that valuable business information must be kept 
secret from the competition, and for good reason.
    Estimates show that trade secret theft costs the U.S. 
economy between $180 billion and $540 billion. The threat posed 
by trade secret theft is real and significant. Protecting trade 
secrets is a national priority, and this committee has 
demonstrated its commitment to doing so.
    Through the enactment of the Defend Trade Secrets Act, 
Congress dramatically improved protections for U.S. trade 
secrets. That legislation established for the first time in our 
history a Federal right of action for companies to seek redress 
for the harm caused them through the theft of a trade secret. 
It also established a new mechanism for companies to obtain the 
assistance of Federal courts and Federal law enforcement in 
securing a lost trade secret before it is disseminated or 
disclosed.
    But, given the vital importance of trade secrets to the 
U.S. economy, Congress must continue to closely monitor the 
effectiveness of our trade secret protections and do all that 
it can to protect America's most valuable technologies from 
theft.
    Unfortunately, some of the same technologies that have done 
so much to improve our lives continue to make it easy to steal 
valuable trade secrets. A 32 gigabyte USB flash drive can store 
640,000 Word document pages, and file sharing and storage 
facilities allow users to share files at the mere click of a 
mouse. Using these technologies, thieves continue to steal the 
crown jewels of large and small companies alike.
    Recent examples involve the theft of marine construction 
technology, the designs for underwater vehicles developed by a 
defense contractor, the theft of technology used for printing 
on any type of material, and even rice seeds genetically 
programmed to express recombinant human proteins extracted for 
therapeutic uses. In this hearing, we will investigate whether 
the Defend Trade Secrets Act is, in fact, working as intended. 
We will also investigate whether additional safeguards are 
needed to further prevent the theft of U.S. trade secrets.
    28 U.S.C. section 1782 allows foreign entities with merely 
an interest in foreign litigation to compel discovery from U.S. 
companies. The only protections expressly afforded U.S. 
companies in the statute are limited to legally applicable 
privileges, such as the attorney-client privilege. As applied 
to foreign technology disputes, court interpretations of the 
statute unquestionably expose the technologies and confidential 
business information of U.S. companies to possible theft or, at 
a minimum, disclosure to competitors.
    This hearing will provide an opportunity to discuss the 
need to amend 28 U.S.C. section 1782 to prevent foreign 
entities from abusing U.S. discovery laws to impermissibly gain 
access to U.S. trade secrets. I want to thank Chairman Issa for 
overseeing this hearing, and I thank the witnesses for their 
participation. I look forward to delving into this very 
important issue.
    Mr. Issa. I thank the gentleman. It is our pleasure to 
introduce the ranking member of the full committee, the 
gentleman from New York, Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman. Mr. Chairman next 
month marks the 2-year anniversary of President Obama signing 
into law the Defend Trade Secrets Act, DTSA. This bipartisan 
legislation, which passed nearly unanimously, created the 
uniform Federal civil cause of action for misappropriation of 
trade secrets. I was proud to be the lead Democratic sponsor of 
this legislation, alongside the gentleman from Georgia, Mr. 
Collins, as well as Senators Hatch and Coons.
    Trade secrets are proprietary business information that 
derive their value from being and remaining secret. This 
includes secret recipes, software codes, and manufacturing 
processes. Information that, if disclosed, could prove ruinous 
to a company.
    As the U.S. economy becomes more and more knowledge- and 
service-based, trade secrets are increasingly becoming the 
foundation of businesses across the country, with one estimate 
placing the value of trade secrets in the United States at $5 
trillion. Unfortunately, with such fortunes resting on trade 
secrets, theft of this property is inevitable. And in today's 
digital environment, it has never been easier to transfer 
stolen property across the globe with a click of a button.
    By one estimate, the American economy loses between $180 
billion and $540 billion each year due to misappropriation of 
trade secrets. Millions of jobs are lost as a result. Prior to 
enactment of the DTSA, victims of trade secret theft had to 
contend to the patchwork of Federal and State laws that 
provided uneven and inadequate protection to American 
companies.
    The DTSA filled this gap by creating the uniform Federal 
civil cause of action for theft of trade secrets. It also 
provided for expedited ex parte seizure of property but only in 
extraordinary circumstances where necessary to preserve 
evidence or prevent dissemination. We are now 2 years after 
enactment of this legislation, and it is a good time to 
evaluate how the law is working and whether any further 
improvements are warranted.
    I understand that early indications are that the law has 
been a great success. As one of the authors, I am gladdened by 
this. As seen in the recent Waymo v. Uber case, companies are 
successfully using the law to recover damages for the theft of 
trade secrets, and equally important, the courts have not been 
overburdened by a surge of litigation.
    It also appears that courts are finding a reasonable 
balance when exercising its extraordinary ex parte seizure 
authority. But no legislation is perfect, and if additional 
refinements of the law are necessary, we should certainly 
consider them in due course. Trade secrets theft is a drag on 
economic growth and diminishes the incentive to innovate.
    With so much at stake, it is vital that the law includes 
strong protections against theft of trade secrets. We took an 
important step with passage of the Defend Trade Secrets Act, 
and we should continue to look for opportunities to protect all 
forms of American intellectual property. Thank you, Mr. 
Chairman, for holding this important hearing. I look forward to 
hearing from our witnesses, and I yield back the balance of my 
time.
    Mr. Issa. I thank the gentleman. Without objection, all 
members' opening statements are made part of the record.
    Mr. Issa. Pursuant to the committee's rules, would you all 
three please rise to take the oath? Raise your right hands. Do 
you solemnly swear or affirm that the testimony you are about 
to give will be the truth, the whole truth, and nothing but the 
truth? Please be seated. Let the record indicate that all three 
witnesses answered in the affirmative.
    Our distinguished panel of witnesses today include Mr. 
Kenneth Corsello, chair of the Trade Secrets Committee at the 
Intellectual Property Owners Association; Mr. James Pooley, of 
James Pooley, PLC; and Mr. David Almeling, partner at O'Melveny 
& Myers LLP. In other words, we have some very smart lawyers 
here today.
    It is the custom of the House and the rule of the committee 
that we do our best to limit you each to 5 minutes so that we 
can grill you with questions after your short statements. But, 
as is always the case, your entire written statements will be 
made a part of the record in the entirety. So, you need not 
read off of anything. You can go extemporaneous for all 5 
minutes, and we will still write down that you said everything 
that you submitted to us. So, with that, Mr. Corsello.

STATEMENTS OF KENNETH CORSELLO, CHAIR, TRADE SECRETS COMMITTEE, 
 INTELLECTUAL PROPERTY OWNERS ASSOCIATION (IPO); JAMES POOLEY, 
  JAMES POOLEY, PLC; AND DAVID ALMELING, PARTNER, O'MELVENY & 
                           MYERS LLP

                 STATEMENT OF KENNETH CORSELLO

    Mr. Corsello. Thank you. Chairman Issa, Chairman Goodlatte, 
Ranking Member Johnson, Ranking Member Nadler, and members of 
the subcommittee, thank you for the opportunity to testify 
today on the importance of trade secret protection to American 
companies. My name is Ken Corsello, and I am the intellectual 
property counsel for IBM's Watson Customer Engagement business 
unit. I currently serve as the chair of the Trade Secret 
Committee of the Intellectual Property Owners Association, 
which is known as IPO.
    I am testifying today on behalf of IPO, a trade association 
representing companies and individuals in all industries and 
fields of technology who own or are interested in intellectual 
property rights. IPO supported the legislation that became the 
Defend Trade Secrets Act of 2016, known as the DTSA, and we 
continue to support strong trade secret laws. As the Supreme 
Court has recognized, trade secret law promotes the sharing of 
knowledge and the efficient operation of industry.
    The trade secret laws set a standard of commercial ethics, 
good faith, and fair dealing, and thus facilitate the 
functioning of our economy. Without strong trade secret 
protections, concern for possible disclosure of valuable 
information would cause companies to be less willing to share 
knowledge and companies' security precautions and costs would 
increase. For American individuals and companies, the 
availability of adequate legal measures to protect trade 
secrets has continued to grow in importance during the 2 years 
since the DTSA came into effect.
    Trade secrets underlie business models across all industry 
sectors. For the purposes of the DTSA, trade secrets reach all 
forms and types of financial, business, scientific, technical, 
economic, or engineering information. This includes the 
proprietary software that is the intelligence behind many of 
the products and services that we use today, as well as the 
proprietary data businesses increasingly rely upon.
    Using sophisticated software, companies can now extract new 
insights and value from the data they collect. DTSA plays an 
important role in protecting insights learned by applying data 
analysis techniques to big data sets. These insights allow 
businesses to improve and to reduce the costs of the products 
and services.
    But businesses will be less willing to make investments 
needed to gather data and implement analytics tools without 
confidence that the legal system will protect their proprietary 
insights from being taken by others. Another reason for the 
increased importance of trade secret protection is that 
information has increasingly become easier to steal. With a few 
mouse clicks, for example, thousands of files can be copied to 
a thumb drive. The DTSA provides important Federal legal 
remedies to discourage such theft.
    In addition, decreases in the strength of patent protection 
over the past decade have, at the margins, increased the 
importance of trade secret protection. But I want to caution 
that trade secret protection, copyright protection, and patent 
protection are complementary, not substitutes for one another.
    If, for example, a particular technology cannot by its 
nature be commercialized without disclosing the innovation, as 
is common, then trade secret protection is not appropriate, and 
such innovation can only be protected by patents.
    IPO members are grateful to this committee for its work to 
adopt the protections included in the DTSA. The significant 
number of cases brought under the DTSA already is evidence of 
its usefulness. IPO members are watching these developments in 
courts, and at this time are not aware of any significant 
complaints about the DTSA itself. But there is more that can be 
done to protect trade secrets.
    The full IPO board recently adopted a resolution supporting 
improving protection of trade secrets of American companies by 
reforming 28 U.S.C. section 1782. This is the statutory section 
that allows foreign litigants to come into U.S. courts and gain 
access to testimony and other evidence in many cases, including 
trade secrets, for use in foreign judicial proceedings.
    Given the growing importance of trade secrets in our modern 
economy, legislation reforming section 1782 is needed to 
prevent compelled production of confidential information in 
situations where the district court cannot effectively 
guarantee its protection, as well as to carry out the original 
intent of the statute by encouraging reciprocal treatment of 
U.S. persons by foreign jurisdictions. Reforming section 1782 
would encourage other countries to improve their protections 
for trade secrets and will provide an incentive for those 
countries to bring their civil dispute resolution systems up to 
U.S. standards.
    In conclusion, the member companies of IPO know that our 
value is in our ideas and our creativity. The DTSA provides 
important tools for safeguarding our proprietary information so 
that we can continue to lead the world in creating new and 
innovative technologies, products, and services. I thank you 
for your attention; I will be pleased to respond to any 
questions.
    Mr. Issa. Thank you.
    Mr. Pooley.

                   STATEMENT OF JAMES POOLEY

    Mr. Pooley. Good afternoon, Chairman Issa, Ranking Member 
Johnson, Chairman Goodlatte, Ranking Member Nadler, and members 
of the subcommittee. Thank you for inviting me here today. My 
name is James Pooley. I became a lawyer in Silicon Valley in 
1973, and since then have handled hundreds of trade secret 
disputes in State and Federal courts throughout the country.
    My legal treatise, ``Trade Secrets,'' has been updated 
continuously since 1997. My most recent business book, 
``Secrets of Managing Information Assets in the Age of 
Cyberespionage,'' was released in 2015. In December of that 
year, I was privileged to testify to the Senate under then-
pending Defend Trade Secrets Act. I am currently chair of the 
Sedona Conference Working Group 12 on Trade Secrets and am co-
chair of the Trade Secrets Task Force of the International 
Chamber of Commerce.
    Over the past 40 years, we have witnessed the most profound 
change in the nature of business assets since the beginning of 
the Industrial Revolution. We have transformed an economy that 
depends primarily on tangible assets, like heavy machinery and 
railroads, to an economy that depends primarily on data. 
Importantly, this new property that fuels our economy is mainly 
protected as trade secrets.
    Trade secret theft hurts all kinds of companies. When 
businesses lose secrets to a competitor, the competitor can go 
straight to manufacturing without the costs and risks of honest 
R&D, allowing it to undercut the original innovator, resulting 
in lost profits and jobs. Companies are increasingly aware that 
their trade secrets are vulnerable to loss, and they are taking 
steps to protect themselves. But no management system is 
perfect.
    And so, trade secret law exists to provide judicial 
intervention when the integrity of a company's confidential 
information is compromised or threatened. In order to provide 
more efficient and reliable access to the courts, you enacted 
the Defend Trade Secrets Act of 2016. I am pleased to report 
that it has been a great success. As a litigator using the 
statues, and in many conversations with other lawyers and with 
judges handling these cases, we see that this new statute is 
working as Congress intended.
    The fears expressed during consideration of the law that it 
might encourage a new species of trade secret troll have not 
materialized. And the major concern over possible misuse of the 
DTSA's ex parte seizure provisions has also dissipated, since 
only a small handful of such orders have actually been issued 
by the courts. In short, the DTSA is well on its way to 
achieving its goal of strengthening the enforcement and 
predictability of trade secret rights.
    One of the virtues of getting an improved legal environment 
for the protection of trade secrets is that it is easier to 
spot weak spots in the system. One of those relates to the 
operation of the 28 U.S.C. section 1782, which allows foreign 
litigants to petition U.S. courts for access to testimony and 
other evidence for use in foreign proceedings.
    This statute has been in effect for many years, but due to 
broad interpretations by the courts, it has come to be used 
much more frequently, exposing potentially sensitive data from 
U.S. companies at the request of foreign entities who 
themselves do not face reciprocal discovery. In effect, it is a 
one-way street for the acquisition and export of U.S. 
information.
    What does this have to do with trade secrets? Our own 
courts have a lot of experience in restricting access and 
preventing the misuse or publication of discovery material. 
However, with section 1782, the ultimate recipient of the 
information is a foreign court, where trade secret protections 
can vary from relatively weak, to dangerous, to virtually 
nonexistent.
    In fact, the trade secret enforcement frameworks of most 
countries in the world are substantially weaker than in the 
U.S. Therefore, when the confidential information of a U.S. 
business is ordered produced under a section 1782 petition, 
there are no reliable safeguards to ensure that the receiving 
court will provide adequate protection to maintain secrecy.
    We should all be deeply worried that under section 1782 
information belonging to U.S. companies can be sent to a 
foreign tribunal without any protections imposed by our courts. 
We should insist that U.S. courts, in granting these petitions, 
impose reasonable safeguards against misuse or disclosure 
before the information leaves our country.
    In my view, such a modest requirement would provide 
substantially enhanced protection for the trade secrets of U.S. 
businesses. I appreciate the opportunity to appear before you 
today and welcome any questions. Thank you.
    Mr. Issa. Thank you.
    Mr. Almeling.

                  STATEMENT OF DAVID ALMELING

    Mr. Almeling. Thank you. Chairman Issa, Ranking Member 
Johnson, Chairman Goodlatte, and Ranking Member Nadler, and 
distinguished members of the subcommittee, thank you for 
inviting me to testify today. My name is David Almeling, and I 
am a partner at the law firm of O'Melveny & Myers. I appear 
today, though, in my individual capacity and not on behalf of 
my firm, my clients, or anyone else.
    As the subcommittee recognized as part of its work on the 
DTSA a few years ago, trade secrets are increasingly valuable 
to American companies and increasingly in danger of 
misappropriation. Those trends continue today.
    My colleagues and I conducted a survey, published in 
January 2018, with attorneys who worked at companies. More than 
75 percent of the respondents to our survey said that the risks 
to their trade secrets have increased over the past 10 years; 
50 percent saying those increases have been significant. None--
zero--believe those risks have decreased.
    The DTSA was enacted in part to address these increased 
threats to trade secrets. As noted, next month is the DTSA's 2-
year anniversary. Therefore, I would like to share with the 
subcommittee some data on how the DTSA is progressing in its 
first couple of years.
    First, while trade secrets owners are using the DTSA to 
protect and enforce their trade secret rights, the DTSA did not 
result in an unmanageable surge in litigation. The number of 
new cases filed in Federal district court under the DTSA in its 
first year of existence was about 500 cases. That is just one 
benchmark. During that same year, the number of new patent 
cases was about 10 times that number.
    Second, the Defend Trade Secrets Act cases are spread 
throughout the United States and are not concentrated in a 
small number of venues. During the first year of the DTSA, no 
venue had more than 10 percent of DTSA cases. And the most 
popular venues were the Northern District of California, the 
Southern District of New York, the Northern District of 
Illinois, and the Central District of California. The 
popularity of these venues makes sense as they contain 
population in commercial centers of San Francisco, Chicago, Los 
Angeles, and New York.
    Third, we now have data on the provision of the DTSA that 
permits trade secret owners to request on an ex parte basis 
that certain property be seized from the defendant to prevent 
the dissemination of trade secrets. This is an important though 
limited tool to protect trade secrets when other relief would 
be insufficient. For the approximately 2-year period, from the 
beginning of the DTSA until last week, there have been at least 
21 cases that involved requests for an ex parte seizure, and of 
those, five were granted. Thus, it appears that litigants and 
courts are heading the DTSA's instruction that this remedy is 
only available in extraordinary circumstances.
    From these and other statistics, I draw a couple of 
conclusions. One is that the DTSA has successfully provided 
trade secret owners with a new means of protecting and 
enforcing their trade secrets, which trade secret owners are 
using by filing cases in Federal court when previously they 
were limited in many instances to State court.
    Another conclusion is that courts are applying the DTSA in 
a way that does not appear to be fundamentally changing trade 
secret litigation, but that is instead, importantly, moving 
towards a more uniform, consistent, and efficient application 
of trade secret. In short, the DTSA is a welcome addition to 
the trade secret landscape.
    One issue that affects trade secrets that does not relate 
to the DTSA is section 1782, which has been discussed earlier 
today, and which allows Federal courts to compel U.S. residents 
to participate in discovery related to a foreign proceeding. 
That section does not, however, expressly provide for the 
protection of confidential information. While courts have 
issued various orders to afford some degree of protection, 
additional guidance from Congress would be helpful. I thank the 
subcommittee again for this opportunity, and I look forward to 
your questions.
    Mr. Issa. Thank you. I will now recognize myself for the 
first round of questioning. There will be 12 rounds of 
questioning in case you had questions. You have all alluded to 
it, but let's just go through the numbers maybe to make the 
record complete. And I will ask each of you just to respond 
briefly.
    In a United States case in Federal court, in the ordinary 
course of litigation between two litigators, assuming for a 
moment, as is often the case, they are competitors. Isn't a 
protective order one of the very first items that is 
essentially adjudicated before the judge or a magistrate?
    Mr. Corsello. Yes. That is absolutely correct. Yes.
    Mr. Pooley. Yes. That is true, Congressman.
    Mr. Almeling. That is right.
    Mr. Issa. And in patent cases, is that not almost always 
the first and most argued burden other than motions for 
dismissals?
    Mr. Corsello. Yes. It is early, and oftentimes, there are 
arguments about it.
    Mr. Pooley. Yes. It is quite early, and it is often 
stipulated by the court what the form should be. So, it is done 
quickly. Yes.
    Mr. Almeling. It is often early, and certainly before the 
production of any confidential information.
    Mr. Issa. And the premier court for handling in the U.S. 
events from outside the U.S. would be an administrative court 
known as the ITC; would that not be correct--that the ITC 
handles a huge amount of intellectual property cases on behalf 
of U.S. companies regularly?
    And the question that comes out of that is, is it not true 
the ITC has a form protective order that is universally almost 
never modified, and as a result, litigants know that there will 
be a strong protective order at the time they begin a process 
before the administrative court known as the ITC? Is that to 
the extent you practice? Mr. Pooley, I know you have been 
there.
    Mr. Pooley. Yes, I have, your honor, and yes, you are 
right. They have one.
    Mr. Issa. Please do not ``your honor.''
    Mr. Pooley. Yes. This is very much like a court so, I hope 
you will forgive me. Thank you, Mr. Chairman. Yes, they do have 
an order. Everyone knows what it is, and they are very 
reluctant to change it, and that does add to the predictability 
of those proceedings.
    Mr. Issa. So, as I said in my opening statement, there were 
three places in which we could bring some relief to companies 
who feel that they are going to be or have been ripped off. The 
administration itself, the Article III courts themselves, or 
Congress.
    So, let me just ask a straight question that is not even on 
my list. If the courts were to, sua sponte, begin developing 
and producing for these 1782s, a protective order that was 
robust including, as you mentioned, the retention of 
jurisdiction as appropriate, would that not go a long way 
toward correcting something that we see as a problem that 
could, in fact, really affect American competitiveness?
    Mr. Corsello. Well, yes. If the courts would uniformly do 
that, that would help. It might be difficult to get them all to 
march on the same tune.
    Mr. Issa. Well, the ninth circuit, of course, would lead 
the way I am sure, but Mr. Pooley, speaking on behalf of the 
9th Circuit.
    Mr. Pooley. Yes. I would not dare to do that, Mr. Chairman, 
but yes. It would be helpful. It would, of course, be most 
helpful if the courts were informed in each case about the 
risks of where the information is going. What tribunal is 
getting it, and that would help them draft an appropriate kind 
of protective order.
    Mr. Issa. Mr. Almeling, I am going to modify the question 
for the answer to try to get as much in as I can. If the courts 
need to do it as uniformly as possible, if they need to 
consider the fact of, if you will, the worse case scenario of a 
foreign country--let's say China just for an example--where it 
could be a government entity essentially on a systematic basis 
trying to exploit information using litigation, since that is a 
pattern that we know exists.
    If you assume all of that, then do you believe that there 
is a role or requirement that Congress create that uniformity 
by dictating or mandating that at least the consideration and 
certain parameters of a protective order be placed?
    Mr. Almeling. It would certainly be helpful for our 
Congress to provide some guidance on those protections and the 
confidential aspects of the discovery that takes place 
overseas.
    Mr. Issa. I could send them a draft, but I am assuming you 
are thinking of something a little stronger than just a 
suggestion.
    Mr. Almeling. There are various things Congress can do that 
would assist the courts. Unfortunately, right now 1782 does 
not, which is one of the reasons that we are here today is that 
it would be helpful if it did have something like that.
    Mr. Issa. Mr. Corsello, I am going to again modify the 
question. Assuming that that were not the only remedy, and 
assuming that we did that, what else would you say needs to 
occur besides this form of guidance, if you will, on a 
protective order? And I am going to give you the leading 
question. The Department of Commerce and our State Department 
regularly engage in global agreements; agreements for standard 
setting.
    Do you believe that some part of the administration's work 
should include, if you will, reciprocal trade agreements that 
recognize that this problem could go both ways and that there 
need to be fair protections between, at least, responsible 
nations?
    Mr. Corsello. Yes. I think that is exactly right. I think 
that would be very helpful. What we want to see is reciprocity. 
We want to see the other nations, you know, come up to U.S. 
standards.
    Mr. Issa. So, in closing with my questions, the answers I 
think I heard was it would be nice if the courts recognized 
that this gap is fillable, at least in part by their taking 
responsibility for protective orders, which they have a right 
to do in a case.
    It would be equally, if not better, for the uniformity of 
those to come from guidance of some sort in a way of 
legislation from Congress. And the administration needs to 
weigh-in from a trade standpoint to have reciprocal agreements 
that envision responsible countries, each directing their 
courts to do something that would allow for protection?
    Mr. Corsello. I agree with that.
    Mr. Issa. So, we have got three branches here that all need 
to work, right?
    Mr. Corsello. Yes.
    Mr. Issa. With that, I recognize the ranking member for a 
similar round of questioning.
    Mr. Johnson of Georgia. Thank you, and unlike a judge, I 
will be able to----
    Mr. Issa. But you are a judge.
    Mr. Johnson of Georgia. Well, not in this proceeding. I 
have often wanted judges to be here to be impartial arbiters. 
So, I can relate to you, Mr. Pooley. But, Mr. Corsello: has the 
availability of adequate legal measures to protect and enforce 
trade secrets grown in importance in the past 2 years that the 
DTSA has been enacted?
    Mr. Corsello. Yes. Absolutely it has. I mean, trade secret 
information has become more valuable, and it has become easier 
to steal, even in the past 2 years.
    Mr. Johnson of Georgia. Why has the value increased at this 
rate? At an incredible rate, actually.
    Mr. Corsello. Well, I think to a large degree, it is the 
advances in information technology have made information more 
important to our economy and to our industry. That is a big 
part of it.
    Mr. Johnson of Georgia. How would reforming 28 U.S.C. 
section 1782 encourage other countries to improve their 
protections for trade secrets?
    Mr. Corsello. Well, if we included, for example, a part of 
section 1782 that would only allow for the disclosure and 
production information. If it was protected by other countries, 
then they would have an incentive to add those type of 
protections to their laws.
    Mr. Johnson of Georgia. Thank you. Mr. Pooley, is it true 
that U.S. companies are often singled out for targeting for 
trade secret theft?
    Mr. Pooley. Yes, it is, Mr. Johnson. Most of the valuable 
information produced in the Information Age comes from here, 
and that makes us a target because this is where the valuable 
property is.
    Mr. Johnson of Georgia. Thank you. In your testimony, you 
state that in a recent survey by the National Science 
Foundation and the Census Bureau, companies classified as ``R&D 
intensive'' were asked to rank the importance of various kinds 
of IP laws in protecting their competitive advantage and trade 
secrets came out on top. Can you elaborate on that?
    Mr. Pooley. Yes. I think that does not mean that patents 
are not important because, of course, they protect critical 
inventions, but information is what is protected by trade 
secrets, and that is much broader. And so, companies have to 
look very carefully at what it is that provides them a 
competitive edge across their entire business, and when they do 
that, they see that trade secrecy is something that is relevant 
more of the time than patenting.
    Mr. Johnson of Georgia. The importance of trade secrets; is 
it often more to smaller businesses than larger businesses?
    Mr. Pooley. Yes. Indeed, it is. Patents are expensive, and 
sometimes the innovations of small businesses, in order to 
succeed in a fast-growing market, they have to rely on simply 
being able to protect their first mover advantage and keeping 
the information that they do not want the competition to see 
inside their own organization.
    Mr. Johnson of Georgia. Thank you. Mr. Almeling, is precise 
data on trade secrets and theft of trade secrets difficult to 
obtain? And if so, why?
    Mr. Almeling. It is. One of the reasons is trade secrets 
are, by definition, secret, and so there is not a lot of public 
information that exists about them. Companies are obviously 
reluctant to share information about what they consider secret.
    Another is that the way that we track litigation in the 
United States often looks at certain information that is 
tracked for other types of IP. There is not yet that same type 
of information for trade secret cases. That could change, of 
course, and it will be useful for statistical purposes if it 
did, but right now it is difficult to analyze.
    Mr. Johnson of Georgia. During the first year after the 
DTSA was enacted, what were the most popular venues for trade 
secret cases, and were those the most popular venues for trade 
secrets before DTSA was enacted?
    Mr. Almeling. The most popular venues after the DTSA were 
in California in the Northern District, in New York in the 
Southern District, Illinois in the Northern District, and also, 
California in the Southern District, and the answer to your 
second part of the question is yes. When you compare the data 
before the DTSA to the data after the DTSA, the same courts are 
the most common sources for trade secret cases.
    Mr. Johnson of Georgia. Does the popularity of those venues 
make sense? I suppose it does, but what is your opinion?
    Mr. Almeling. I agree. That, it does. They are commercial 
and population centers. They also are centers of major 
innovation in the United States, either from a technical 
perspective, a financial perspective, or from others. They are 
large, important areas and those are the districts that 
comprise them.
    Mr. Johnson of Georgia. Thank you, and I yield back, Mr. 
Chairman.
    Mr. Issa. Just for the record, are they not also the 
corporate headquarters of the Fortune 500, New York, Chicago, 
Los Angeles and so on? So, it is sort of a combination of 
innovation, but also, to be honest, it is where the records are 
kept?
    Mr. Almeling. That is correct.
    Mr. Issa. Thank you. We now go to the gentleman from 
Georgia, Mr. Collins.
    Mr. Collins. Thank you, Mr. Chairman. Thanks for holding 
this hearing today. I am glad to have it. Trade secrets is, we 
have talked about before, the lifeblood of many businesses and 
their value to the economy, and the continuing prevalence and 
growth in American innovation. It cannot be overstated.
    It was with that in mind when we worked on this, and I 
introduced this Defend Trade Secrets Act in the 114th Congress 
of Senator Hatch, and it is one of those times when 
bipartisanship showed through because in 2016 it passed the 
House with 410 to 2, and 87 to 0 in the Senate, which is 
something in and of itself is a miracle. It has created the 
Federal Civil Cause of Action for Trade Secret 
Misappropriation.
    It also required something that I want to point out before 
we get started, Mr. Chairman, is this. It required the Attorney 
General to direct the patent and trademark office, and the 
Intellectual Property Enforcement Coordinator to issue a report 
on the theft of trade secrets abroad, and recommendations for 
how to better protect against it and improve it.
    Now this was supposed to be an initial one after a year and 
then biannual after that. Nearly 2 years later that report has 
not been issued, and that statistics that we were talking about 
just a second ago is approached in here that we could look at.
    ``Today I am sending a letter to the Attorney General 
requesting that this report be issued so that we have more 
information on the scope and continued problem of trade secret 
theft. I am glad to have this opportunity today to discuss the 
importance of trade secret protections and analyze the effects 
of Defend Trade Secrets Act and look for continued ways to 
improve our intellectual property.''
    I think one of the things that we have seen from the bill 
that we authored was the simple fact that it is working, and I 
think that is a good thing to see. Are there things that we can 
improve on? Yes. I believe so, and Mr. Almeling, one of the 
biggest parts, and you touched on this, and I do not want to 
rehash what you said, but the ex parte seizure provision was 
probably one of the more controversial issues that we had to 
work out. We did a lot of mitigation in the bill to do that. 
Would you agree that it is being used as intended and that it 
has been applied and interpreted in real world cases as we 
needed it to be?
    Mr. Almeling. I think it has. The statutory provision that 
was created for the ex parte seizure, as you noted, is very 
detailed, and courts have been following that structure in 
issuing orders, and they have been analyzing the elements that 
Congress required them to analyze. And it has been used not in 
large share of trade secret cases. The other types of 
injunctions of temporary restraining orders and preliminary 
injunctions have been used for those. It has rather been used 
for those small number of extraordinary cases where it would be 
most applicable.
    Mr. Collins. Good. Well, and I think that is one of the 
things, and one of the things is I think the bill is working. I 
am glad to see it is working, but there is also some issues 
that we do have, and I will open this up to anybody. We will 
start right there since you were just answering.
    In your testimony you talked about the TRIPS Agreement 
setting basic standards for trade secret protection through the 
industrialized world, but it may not be enough because of 
weaker trade secret laws and protections overseas, and I have 
heard this from some companies as well and the issues of it. 
What can we do there maybe through an improving what we have or 
making that a little bit perceived differently, I guess is the 
best way to say it, especially when dealing with foreign 
countries?
    Mr. Almeling. I think that is where section 1782 comes 
about because that involves the discovery for use in a foreign 
proceeding and providing additional details about the 
protection of confidential information would make that 
stronger.
    Mr. Collins. Okay. Mr. Pooley, let's talk real world. One 
of the things about this is sometimes we do not have this 
opportunity to come back and look at a bill that maybe is 
working and maybe things we can do, but this one is working. 
Can you give us some examples on some actual cases and how it 
was strengthened that this actually helped?
    Mr. Pooley. Yes. Well it was mentioned earlier--First of 
all, thank you, Mr. Collins, for your work in bringing the DTSA 
to reality. Earlier someone mentioned the Waymo v. Uber case. A 
very well-known case that was in Federal court largely because 
the patent claim in it went away. It was there because of the 
Defend Trade Secrets Act original jurisdiction. And so, we can 
see there an example of a very significant case being taken to 
Federal court because it could be.
    And in my work I have reviewed probably hundreds of cases 
that have resulted in opinions from the Defend Trade Secrets 
Act, and they all have approached it in a very classical, sober 
way that aligns with the jurisprudence that we are all very 
familiar with.
    So, I think one of the most important things to report is 
that there has not been anything terribly unusual about the 
opinions that we have seen come out, and the courts have been, 
as Mr. Almeling expressed, applying this statute in the way 
that it was intended.
    Mr. Collins. Well, that is what you like to have. And just 
one final--just to end all this, Mr. Chairman, is one of the 
things is we know this did not stop this issue. Okay? We still 
know trade secrets is a big issue. We still know the theft is 
going on. In fact, the FBI and the DOJ is continuing to make a 
handful of these cases every year; 79 currently pending at the 
end of fiscal year 2017.
    Just real quick, if Mr. Corsello, anybody wants to jump in. 
From an enforcement standpoint, is there anything to improve 
all or help with that would help the law enforcement address 
and keep up with the trade secret theft, just as I close out my 
question?
    Mr. Pooley. Well, my own view, Mr. Collins, is that we need 
more international discussion over how to help other countries 
bring up their laws and their enforcement systems to a level 
that is more effective than what we see now, and that if we can 
just carry on a dialogue, whether within the context of free 
trade agreements or otherwise just as best practices. That 
would be very helpful.
    Mr. Collins. Okay. Good. Mr. Corsello.
    Mr. Corsello. I agree.
    Mr. Collins. Good. Okay. Mr. Chairman, I appreciate it, and 
I think we are seeing good results, and sometimes it is 
actually good to see these comes back a lot like that. Thanks 
for your help as well.
    Mr. Issa. Thank you. Now for round 2 of 12. No. I will be 
brief. I have a question. Since we have been informed by the 
Department of Justice that they are working on the report that 
they required us, that we required in legislation one year. Let 
me ask a question.
    I do not want to second guess, but let's just assume that 
they are working on it right behind the 1.3 million documents 
that were subpoenaed that are also overdue. Let's just assume 
that for a moment. In retrospect, would we have been better off 
having the Office of Management and Budget and OPEC or some 
other group that really is more related to this gather from the 
Department of Justice as needed and the other agencies?
    The statute seemed pretty neat at the time but, of course, 
it turned out the Department of Justice is not necessarily very 
well-suited to this historically. Any comments on that from 
your experience? You do not have to bash the Department of 
Justice. You just have to ask should this committee consider, 
now and in the future, the accumulation of this data being done 
either by the Office of Management and Budget or some other 
part of the executive branch?
    Mr. Corsello. Yeah. I do not have any insights as to which 
branch would make more sense, but I think it would be good for 
the committee to think about, given the fact that it is a bit 
late, whether there is a better part of the government to do 
this, and I do agree. I have been looking forward to it, 
personally.
    Mr. Issa. I, personally, would have sent it to Commerce 
myself, but only because the obvious effect on domestic 
commerce does give them an interest in--we want to send things 
overseas. Just not our secrets. Mr. Pooley, any ideas from your 
years of experience in working with this bureaucracy?
    Mr. Pooley. Most of my years of experience were with a 
different bureaucracy, but I would not presume to have an 
opinion on which part of this one here in Washington is the 
right one to do this. I would only agree that it is critically 
important that we gather the information from the best sources 
available.
    Mr. Issa. Any closing comments on that? One of the 
challenges we have is if they do not meet a revised deadline, 
how do we gather the information since we have received nothing 
yet to date?
    Mr. Almeling. I apologize, Chairman. My practice focuses on 
trade secret counseling and litigation. So, I will defer to the 
subcommittee on what it believes. I pass.
    Mr. Issa. Then you get my closing question. Up until now, 
China has not aggressively used this technique as a backdoor 
for stripping off information. Is there anything under current 
law and/or practice that would stop this from being a new and 
effective way using litigation in China. A place where if you 
sue them for stealing your technology, they sue you back for 
patent infringement. Your case stalls. Their case goes forward 
and you typically lose. With the kind of practices that go on 
in that very large economy, is there any reason to believe that 
if we do not fix this it could not grow to be more than just 
opportunistic companies, but rather a more concerted effort to 
take trade secrets?
    Mr. Almeling. I have not done a detailed analysis or a----
    Mr. Issa. But you are a clever lawyer practicing. If you 
had a client, let's say China, do you believe that you could 
advise your client that this loophole could be turned into a 
manhole?
    Mr. Almeling. It is certainly correct that we do need to 
fix section 1782, and companies and individuals throughout the 
world are using that. So, I would say that if there are things 
that we can do to shut that loophole, we should certainly do 
them.
    Mr. Pooley. I would only add, Mr. Chairman, that there are 
lawyers in law firms throughout the world who are promoting 
this particular statute as a way to do the kinds of things that 
you have described here.
    Mr. Issa. So, it has been discovered. It is only a question 
of how fast this wormhole grows.
    Mr. Pooley. It is well known.
    Mr. Corsello. I do not have anything to add to that.
    Mr. Issa. Okay. Let me just close with a statement and go 
to the ranking member. In my practice, before I came to 
Congress, the one thing that I feared the most being lost in 
the way of intellectual property or trade secrets was the 
vulnerability of my company. That ultimately, the American 
people sometimes think of a patent and a trade secret as the 
same thing.
    They think of a trade secret is something that you are 
keeping secret because you are not patenting it, because you do 
not want to share it with the world, but if I had a high cost 
of a product--let's say I was selling a product at break-even 
just to be competitive--I did not want my competitors to know, 
especially if they had a lower cost of production than I did.
    Vice versa, if I had a lower cost of production, I sure did 
not want them to know who my source was that was giving me that 
lower cost of production. And so, I always tell people the 
difference between much intellectual property, which is about 
what you have, and trade secrets is trade secrets sometimes are 
protecting from people knowing what you do not have.
    And you cannot patent what you do not have. You cannot 
patent your vulnerabilities, and yet, if people learn your 
vulnerabilities it can destroy your company and so, hopefully 
today we have at least made a down payment on people 
understanding that we do need to protect it as or more 
strenuously than we do patents. With that, the ranking member 
gets the close.
    Mr. Johnson of Georgia. Thank you. I would like to know a 
little bit more about the scope of the problem of compelled 
production under section 1782 of confidential information to 
foreign tribunals when those tribunals do not protect secrets 
of U.S. businesses. How many times has that occurred over the 
last 2 years since passage of the DTSA versus the 2 years prior 
to passage? We have any idea?
    Mr. Corsello. Well, I am not aware of any numbers, any 
counts, statistics on the number of times production has been 
compelled. We have counted the number of decisions from the 
courts; written decisions on the section 1782 petitions, and 
that number has gone up dramatically since the Intel v. AMD 
decision, 2004.
    There were an average of 63 decisions per year, written 
opinions of the court all based on a 1782 petition since 2004. 
Before 2004, there were only about 13 decisions per year. So, 
that Intel v. AMD really opened up the aperture and made it 
much more widely used than it was.
    Mr. Pooley. And I think in response to your question, there 
has not been any noticeable difference in filings of these 
petitions since the DTSA.
    Mr. Johnson of Georgia. Do you believe the DTSA provides 
sufficient remedies to discourage the theft of trade secrets?
    Mr. Pooley. Well, in general, absolutely, Mr. Johnson. As 
we said earlier, the DTSA is an improvement in an environment 
that is quite challenging, but one of the problems that remains 
to be attended to is section 1782 because we have not, until 
now, instructed the courts that confidentiality protection for 
the information is one of the issues they should be looking at 
before the information leaves the country. And if we were to 
fix that, that would improve the situation significantly.
    Mr. Johnson of Georgia. Thank you. Any other comments?
    Mr. Corsello. No. I do not have any more.
    Mr. Johnson of Georgia. All right. Well, I thank you, 
gentlemen for appearing today and I yield back to the chairman.
    Mr. Issa. Thank you, and in closing, I am simply going to 
ask that the extract from the Procter & Gamble v. Kimberly-
Clark be placed in the record, and the reason for it is that, 
although it does not go to the ranking member's statement, it 
does go to an outline of things which the judge believed could 
be helpful and could, in fact, lead to some protection.
    I might note that in this case in Wisconsin, I guess it 
was, they did not order it. They simply considered that they 
could do it. And I think it makes the case that judges do know 
what could be helpful. They deal with protective orders 
regularly, and since the judge knew what was right, but in this 
case did not do it, I think it should be placed in the record 
so that either the courts, the administration or we can make it 
clear that they should do it.
    Mr. Issa. And with that, all members will have 5 days in 
order to supplement their questions and comments. We would ask 
that you do the same. If you have any additional thoughts that 
came as a result of this hearing, please submit it to us by the 
end of the week. We stand adjourned.
    [Whereupon, at 3:02 p.m., the subcommittee was adjourned.]
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