II 

113TH CONGRESS 

1ST SESSION S. 1770 

To provide for Federal civil liability for trade secret misappropriation in 

certain circumstances. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 21, 2013 

Mr. FLAKE introduced the following bill; which was read twice and referred 

to the Committee on the Judiciary 

A BILL 

To provide for Federal civil liability for trade secret 

misappropriation in certain circumstances. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Future of American 

5 Innovation and Research Act of 2013’’ or the ‘‘FAIR 

6 Act’’. 

7 SEC. 2. DEFINITIONS. 

8 In this Act— 

9 (1) the term ‘‘covered trade secret’’ means a 

10 trade secret that is related to or included in a prodVerDate Mar 15 2010 02:16 Nov 27, 2013 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1770.IS S1770

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1 uct or service that is used in or reasonably antici2 pated to be used in interstate or foreign commerce; 

3 (2) the term ‘‘improper means’’— 

4 (A) includes theft, bribery, misrepresenta5 tion, breach or inducement of a breach of a 

6 duty to maintain secrecy, and espionage 

7 through electronic or other means; and 

8 (B) does not include reverse engineering or 

9 independent derivation alone; 

10 (3) the term ‘‘misappropriate’’ means— 

11 (A) to acquire a trade secret of another by 

12 improper means, if the person who acquires the 

13 trade secret knows or has reason to know that 

14 the acquisition is by improper means; or 

15 (B) to disclose or use a trade secret of an16 other without express or implied consent, if the 

17 person who discloses or uses the trade secret— 

18 (i) used improper means to acquire 

19 knowledge of the trade secret; or 

20 (ii) at the time of the disclosure or 

21 use, knows or has reason to know that his 

22 or her knowledge of the trade secret was— 

23 (I) derived from or through a 

24 person who used improper means to 

25 acquire the trade secret; 


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1 (II) acquired under cir2 cumstances giving rise to a duty to 

3 maintain the secrecy, or limit the use, 

4 of the trade secret; or 

5 (III) derived from or through a 

6 person who owed a duty to the person 

7 seeking relief to maintain the secrecy, 

8 or limit the use, of the trade secret; 

9 (4) the term ‘‘person’’ means a natural person, 

10 corporation, business trust, estate, trust, partner11 ship, limited liability company, association, joint ven12 ture, government, governmental subdivision or agen13 cy, or any other legal or commercial entity; and 

14 (5) the term ‘‘trade secret’’ means any informa15 tion, including a formula, pattern, compilation, pro16 gram, device, method, technique, or process, that— 

17 (A) derives independent economic value, 

18 actual or potential, from not being generally 

19 known to, and not being readily ascertainable 

20 through proper means by, the public or other 

21 persons who can obtain economic value from 

22 the disclosure or use of the information; and 

23 (B) is the subject of efforts that are rea24 sonable under the circumstances to maintain 

25 the secrecy of the information. 


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1 SEC. 3. CIVIL ACTION. 

2 (a) IN GENERAL.—The owner or lawful possessor of 

3 a covered trade secret may bring a civil action against a 

4 person who misappropriates, threatens to misappropriate, 

5 or conspires to misappropriate the covered trade secret— 

6 (1) while located outside the territorial jurisdic7 tion of the United States; or 

8 (2) on behalf of, or for the benefit of, a person 

9 located outside the territorial jurisdiction of the 

10 United States. 

11 (b) FEDERAL COURT JURISDICTION.—The district 

12 courts of the United States shall have exclusive jurisdic13 tion of a civil action under this Act. 

14 (c) EXTRATERRITORIALITY.—A civil action under 

15 this Act may arise from conduct outside the territorial ju16 risdiction of the United States if the conduct, either by 

17 itself or in combination with conduct within the territorial 

18 jurisdiction of the United States, causes or is reasonably 

19 anticipated to cause an injury— 

20 (1) within the territorial jurisdiction of the 

21 United States; or 

22 (2) to a United States person. 

23 SEC. 4. REMEDIES. 

24 In a civil action brought under this Act, a court 

25 may— 

26 (1) issue— 


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1 (A) an order for appropriate injunctive re2 lief against any conduct described in section 

3 3(a); 

4 (B) an order requiring affirmative actions 

5 to be taken to protect a covered trade secret 

6 from further misappropriation; and 

7 (C) if the court determines that it would 

8 be unreasonable to prohibit further possession, 

9 disclosure, or use of a covered trade secret, an 

10 order requiring payment of a reasonable royalty 

11 for any ongoing disclosure or use of a covered 

12 trade secret, in addition to the damages de13 scribed in paragraph (2); 

14 (2) award— 

15 (A) damages for actual loss caused by the 

16 misappropriation of a covered trade secret; and 

17 (B) damages for any unjust enrichment 

18 caused by the misappropriation of a covered 

19 trade secret that is not addressed in computing 

20 damages for actual loss under subparagraph 

21 (A); 

22 (3) if a trade secret is willfully or maliciously 

23 misappropriated, award punitive or exemplary dam24 ages in an amount not more than twice the amount 

25 of the damages awarded under paragraph (2); and 


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1 (4) if a claim of misappropriation is made in 

2 bad faith, a motion to terminate an injunction is 

3 made or opposed in bad faith, or a trade secret is 

4 willfully or maliciously misappropriated, award rea5 sonable costs and attorney’s fees to the prevailing 

6 party. 

7 SEC. 5. PROCEDURE. 

8 (a) PLEADINGS.— 

9 (1) COMPLAINT.—A complaint filed in a civil 

10 action brought under this Act shall include a sworn 

11 representation by the plaintiff that the dispute in12 volves conduct described in section 3(a). 

13 (2) AFFIRMATIVE DEFENSE.—It shall be an af14 firmative defense in a civil action brought under this 

15 Act that each alleged covered trade secret in dispute 

16 was readily ascertainable through proper means by 

17 other persons who did not already know the covered 

18 trade secret at the time of any alleged misappropria19 tion, threat to misappropriate, or conspiracy to mis20 appropriate. 

21 (b) FORUM NON CONVENIENS.—In considering a 

22 motion to dismiss or stay on forum non conveniens 

23 grounds filed in a civil action brought under this Act, a 

24 court shall— 


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1 (1) give great weight to the plaintiff’s choice of 

2 forum; and 

3 (2) consider whether the plaintiff reasonably 

4 could receive fair and impartial treatment in the 

5 courts of the jurisdiction in which the defendant is 

6 domiciled. 

7 (c) ANTI-SUIT INJUNCTIONS.—In a civil action 

8 brought under this Act, the court may enter an injunction 

9 enjoining a defendant over whom the court has personal 

10 jurisdiction from pursuing subsequently filed litigation in 

11 another jurisdiction if— 

12 (1) the parties are the same in both matters; 

13 (2) the resolution of the case before the enjoin14 ing court will be dispositive of the action to be en15 joined; and 

16 (3) the action in the other jurisdiction threatens 

17 the jurisdiction of the court or the purposes of this 

18 Act. 

19 (d) CONFIDENTIALITY.—In any proceeding relating 

20 to a civil action brought under this Act, the court shall 

21 enter any order and take any other action that is nec22 essary and appropriate to preserve the confidentiality of 

23 trade secrets, consistent with the requirements of the Fed24 eral Rules of Civil Procedure, the Federal Rules of Evi25 dence, and all other applicable laws. 


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1 (e) STATUTE OF LIMITATIONS.—A civil action 

2 brought under this Act may not be commenced later than 

3 3 years after the date on which the conduct described in 

4 section 3(a) that forms the basis for the action was discov5 ered or by the exercise of reasonable diligence should have 

6 been discovered. 

7 SEC. 6. SEIZURES. 

8 (a) IN GENERAL.—In a civil action brought under 

9 this Act, the court may, upon ex parte application and 

10 if the requirements under subsection (b) are satisfied, 

11 issue an order (referred to in this section as a ‘‘seizure 

12 order’’) providing for— 

13 (1) the seizure of any property (including com14 puters) used, in any manner or part, to commit or 

15 facilitate the commission of conduct described in sec16 tion 3(a) that is alleged in the civil action; and 

17 (2) the preservation of evidence in the civil ac18 tion. 

19 (b) REQUIREMENTS.—A court may issue a seizure 

20 order if— 

21 (1) the applicant provides security in an 

22 amount that the court determines is adequate to pay 

23 any damages a person may be entitled to recover as 

24 a result of a wrongful seizure or wrongful attempted 

25 seizure under this section; and 


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1 (2) the court finds that specific facts clearly 

2 show that— 

3 (A) any order other than an ex parte sei4 zure order is not adequate to effectively cause 

5 the cessation of the conduct described in section 

6 3(a) that forms the basis of the action; 

7 (B) the applicant has not publicized the re8 quested seizure; 

9 (C) the applicant is likely to succeed in 

10 showing that the person against whom seizure 

11 is sought misappropriated, threatened to mis12 appropriate, or conspired to misappropriate a 

13 covered trade secret of which the applicant is 

14 the owner or lawful possessor; 

15 (D) the applicant will suffer an immediate 

16 and irreparable injury if a seizure is not or17 dered; 

18 (E) the matter to be seized is located at 

19 the place identified in the application; 

20 (F) the harm to the applicant that would 

21 be caused by denying the application outweighs 

22 the harm to the legitimate interests of the per23 son against whom seizure is sought that would 

24 be caused by granting the application; and 


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1 (G) if the applicant were to proceed on no2 tice to the person against whom seizure is 

3 sought, that person, or persons acting in con4 cert with that person, would destroy, move, 

5 hide, or otherwise make the matter to be seized 

6 inaccessible to the court. 

7 (c) PROCEDURE.—A seizure order shall— 

8 (1) direct that service of a copy of the seizure 

9 order shall be made by a Federal law enforcement 

10 officer (such as a United States marshal), who, upon 

11 making service, shall carry out the seizure under the 

12 seizure order; 

13 (2) direct that any items seized shall be taken 

14 into the custody of the court; 

15 (3) include a protective order with respect to 

16 items seized, to ensure that confidential, private, 

17 proprietary, or privileged information contained in 

18 the items seized, including any such information be19 longing to the defendant and third parties, is appro20 priately protected and that access to the items seized 

21 is appropriately restricted; and 

22 (4) specify a hearing date, not earlier than 3 

23 days and not later than 10 days after the seizure 

24 order is issued, for the court to review whether the 


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1 items seized should remain in the custody of the 

2 court. 

3 (d) ORDER UNDER SEAL.— 

4 (1) IN GENERAL.—Except as provided under 

5 paragraph (2), a seizure order, together with any 

6 supporting documents, shall be sealed until the per7 son against whom the seizure order is directed has 

8 an opportunity to contest the seizure order. 

9 (2) ACCESS AFTER SEIZURE.—A court shall 

10 allow a person against whom a seizure order is di11 rected to have access to the seizure order and any 

12 supporting documents after the seizure is carried 

13 out. 

14 (e) SEIZURE HEARING.— 

15 (1) DATE.—A court that issues a seizure order 

16 shall hold a hearing under this subsection on the 

17 date set by the court under subsection (c)(4) unless 

18 a party shows good cause for setting a different 

19 date. 

20 (2) BURDEN OF PROOF.—At a hearing under 

21 this subsection, the party that obtained the seizure 

22 order shall have the burden of proving that the fac23 tual and legal grounds necessary to support the sei24 zure order are still in effect. 


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1 (3) DISSOLUTION OR MODIFICATION OF

2 ORDER.—If a party fails to meet the burden speci3 fied under paragraph (2), the court shall dissolve or 

4 modify the seizure order appropriately. 

5 (4) DISCOVERY TIME LIMITS.—The court may 

6 issue an order modifying the time limits for dis7 covery under the Federal Rules of Civil Procedure as 

8 necessary to prevent the frustration of the purposes 

9 of a hearing under this subsection. 

10 (f) INJURED PARTY.— 

11 (1) CAUSE OF ACTION.—A party that is injured 

12 by a seizure carried out in a civil action brought 

13 under this Act and that prevails in the civil action 

14 may bring a civil action under this subsection 

15 against the applicant for the seizure order in a dis16 trict court of the United States. 

17 (2) REMEDIES.—A party that prevails in a civil 

18 action brought under this subsection shall recover— 

19 (A) reasonable costs and attorney’s fees in20 curred in defense against the seizure order de21 scribed in paragraph (1) unless the court finds 

22 that extenuating circumstances merit denying 

23 such costs and fees; and 


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1 (B) lost profits and punitive damages if 

2 the seizure order described in paragraph (1) 

3 was sought in bad faith. 

Æ 


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