IB Union Calendar No. 494 113th CONGRESS 2d Session H. R. 5233 [Report No. 113–657] 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.

1. Short title This Act may be cited as the Trade Secrets Protection Act of 2014 . 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: 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. 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.

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