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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5233 Reported in House (RH)]

                                                 Union Calendar No. 494
113th CONGRESS
  2d Session
                                H. R. 5233

                          [Report No. 113-657]

To amend chapter 90 of title 18, United States Code, to provide Federal 
  jurisdiction for the theft of trade secrets, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 29, 2014

   Mr. Holding (for himself, Mr. Nadler, Mr. Coble, Mr. Conyers, Mr. 
  Chabot, Mr. Jeffries, Mr. Richmond, and Ms. DelBene) introduced the 
  following bill; which was referred to the Committee on the Judiciary

                           December 11, 2014

      Additional sponsors: Mr. Collins of Georgia, Mr. Reed, Mr. 
Sensenbrenner, Mr. Smith of Texas, Mr. Hanna, Mr. McHenry, Mr. Deutch, 
  Mr. Smith of Missouri, Mr. Connolly, Mr. Chaffetz, Mr. Guthrie, Mr. 
  King of Iowa, Mr. Marino, Mr. Bachus, Mr. Nunnelee, and Mr. Pallone

                           December 11, 2014

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on July 
                               29, 2014]

_______________________________________________________________________

                                 A BILL

 
To amend chapter 90 of title 18, United States Code, to provide Federal 
  jurisdiction for the theft of trade secrets, and for other purposes.

 

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Trade Secrets Protection Act of 
2014''.

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 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;
                            ``(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:
``Sec. 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 enforcement 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.
                                                 Union Calendar No. 494

113th CONGRESS

  2d Session

                               H. R. 5233

                          [Report No. 113-657]

_______________________________________________________________________

                                 A BILL

To amend chapter 90 of title 18, United States Code, to provide Federal 
  jurisdiction for the theft of trade secrets, and for other purposes.

_______________________________________________________________________

                           December 11, 2014

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
```