Date: 2016-04-27
Speaker: JACKSON LEE (democrat)
Chamber: H

Mr. Speaker. I rise in strong support of S. 1890. the "Defend Trade Secrets Act of 2016". S. 1890. amends the. "Economic Espionage Act of 1996." to create a federal civil remedy for trade secret misappropriation. and expedite ex parte seizure of trade secrets to preserve evidence or prevent dissemination. without preempting state law. "Trade secrets" are the form of intellectual property that protect confidential information. including: marketing data and strategies. manufacturing processes or techniques. confidential and chemical formulae. product design. customer lists. business leads. pricing schedules. and sales techniques. Trade secret law offers protection from trade secret "misappropriation." which is the unauthorized acquisition. use. or disclosure of such secrets obtained by some improper means. Under U.S. law. trade secrets consist of three parts: (i) information that is nonpublic. (2) the reasonable measures taken to protect that information. and (3) the fact that the information derives independent economic value from not being publicly known. American companies are at the forefront of innovation and have some of the largest trade secret and patent portfolios in the world tied to numerous goods and services offered to governments. commercial enterprises. and consumers around the globe. In fact. patent portfolios often grow as a result of the ideas and products that originated as trade secrets. President Obamas Administration identified the importance of this legislation and. "strongly supports the Defend Trade Secrets Act." because he recognizes that as the United States continues to shift from a manufacturing. to a knowledge- and servicebased economy. businesses increasingly depend on trade secrets to protect their confidential knowhow. A 2009 estimate placed the value of trade secrets owned by U.S. companies at five trillion dollars. demonstrating that trade secrets have become an increasingly important part of most companies overall assets. But. the global economy creates a competitive environment in which companies struggle to safeguard this information in light of innovative technologies. such as cell phones. which allow nearly anyone to photograph or otherwise record data and send information nearly instantaneously. A 2013 report. by the Commission on the Theft of American Intellectual Property. estimated that the American economy loses more than $300 billion annually as a result of theft of intellectual property. largely trade secrets. leading to a loss of up to 2.1 million jobs each year. The same theft is slowing U.S. economic growth and diminishing the incentive to innovate that we celebrate today. Our companies pour billions of dollars into research and development. creating products and services that ultimately become the backbone of their businesses. And rightly so. those trade secrets produced through research and development increasingly have become the attractive envy of competitors in other countries. In addition. advances in technology now make it easy to copy trade secret materials onto a jump drive or laptop computer that in a world of less advanced technology would have taken reams of paper to reproduce. Modernization of trade secrets law is long overdue if our legislation is to keep pace with the rapid developments of premier American companies and the technologies and methodologies used by the criminals who target them. The patchwork of state trade secrets laws. while effective for local theft. fail to meet the demands of the global nature of todays trade secret misappropriations. In addition. trade secrets do not enjoy the same federal protections as other types of intellectual property. While it is a federal crime to steal a trade secret. unlike patents. copyrights and trademarks. there is no current federal civil remedy. This confidential business information can be protected for an unlimited time. unlike patents. and requires no formal registration process. But unlike patents. once this information is disclosed it instantly loses its value and the property right itself ceases to exist. demonstrating a stark difference in the potential consequences of securing patent protections versus keeping an innovation as a trade secret. When an inventor seeks patent protection. he or she agrees to disclose to the world their invention and how it works. furthering innovation and research. as well as securing a 20year exclusive term of protection. and the right to prevent others from making. using. selling. importing. or distributing a patented invention without permission. However. in contrast by maintaining it as a trade secret. an inventor could theoretically keep their invention secret indefinitely (ex: formula for CocaCola. the KFC Colonels Secret Recipe). but. the downside is there is no protection if the trade secret is uncovered by others through reverse engineering or independent development. Trade secrets must be valiantly guarded because discovery of a trade secret by fair. lawful methods. such as reverse engineering or independent development. is permitted. As a result. the threat posed to American trade secrets has increased and theft of these secrets robs our economy of growth and innovation. S. 1890. provides a solution to these problematic gaps by making federal law more comprehensive and providing trade secrets owners with remedies that all forms of intellectual property should be afforded. With both a federal criminal and a federal civil cause of action. large and small companies alike will have access to more of the tools that they need to effectively combat trade secret theft and help to ensure future innovation continues to occur within the United States. While trade secret protection is important domestically. as American companies expand in the global marketplace. this protection is also paramount worldwide. As we operate in other countries and work with them to encourage strong intellectual property protection within their own borders. the "Defend Trade Secrets Act" will serve as a model for effective protection. S. 1890 will prevent the occurrence of (1) trade secret theft occurring in the United States and around the world. and (2) trade secret theft harming owner companies and their employees. while allowing the "Economic Espionage Act of 1996" to continue to apply broadly to protect trade secrets from theft. I thank the House Judiciary Committee for quickly approving this legislation. and look forward to seeing this bill pass in the House to move to the Presidents desk to become law. Mr. Speaker. I thank our Leadership for its prowess on intellectual property protection and urge you and your colleagues to support S.