S. 1890, Defend Trade Secrets Act of 2016

S. 1890

Defend Trade Secrets Act of 2016

Sponsor
Sen. Orrin G. Hatch

Committee
Judiciary

Date
April 27, 2016 (114th Congress, 2nd Session)

Staff Contact
Molly Newell

Floor Situation

On Wednesday, April 27, 2016, the House will consider S. 1890, Defend Trade Secrets Act of 2016, under suspension of the rules.  S. 1890 was introduced on July 29, 2015 by Sen. Orrin Hatch (R-UT) and was referred to Senate Judiciary Committee which reported the bill with an amendment in the nature of a substitute on January 28, 2016. The bill passed the Senate with an amendment on April 4, 2016 by a vote of 87-0.

Bill Summary

S. 1890 would amend the Economic Espionage Act of 1996 to provide a federal civil remedy for the misappropriation of trade secrets. Under the bill, an owner of a trade secret could file a civil action in a district court and the court could issue an order to seize any property to prevent the propagation or dissemination of the trade secret. The legislation would require information gathered or stored during a legal proceeding related to trade secrets to be secured to protect its confidentiality. The bill also would increase the fines that may be collected in the event of the theft of a trade secret. Finally, the legislation would require the United States Patent and Trademark Office to submit biannual reports concerning the theft of trade secrets in the United States.

Background

Trade secrets are a form of intellectual property that allow for the legal protection of commercially valuable, proprietary information and make up an increasingly important part of American companies’ intellectual property portfolios.

At the federal level, the Economic Espionage Act of 1996 (18 U.S.C. §§ 1831 et seq.) makes it a federal criminal offense to misappropriate a trade secret that has an interstate or foreign nexus. The EEA, however, does not give trade secret owners a private right of action in federal court.

In a recent report, the Commission on the Theft of American Intellectual Property estimated that annual losses to the American economy caused by trade secret theft are over $300 billion. The same report found that trade secret theft has led to the loss of 2.1million American jobs each year and that the illegal theft of intellectual property is undermining the means and incentive for entrepreneurs to innovate. This in turn is slowing the development of new inventions and industries that could raise the prosperity and quality of life for everyone.[1]

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[1] See S. Rept. 114-220

Cost

The Congressional Budget Office (CBO) estimates that implementing S. 1890 would have no significant effect on the federal budget. Because enacting S. 1890 would affect direct spending and revenues, pay-as-you-go procedures apply. Specifically, the bill would affect civil court filing fees and potentially increase certain fines, which are recorded in the budget as revenues. A portion of those revenues would be spent without further appropriation. On net, CBO estimates that the budgetary effect of those provisions would be negligible for each year and over the 2016-2026 period. CBO estimates that enacting S. 1890 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year period beginning in 2027.

 

Additional Information

For questions or further information please contact Molly Newell with the House Republican Policy Committee by email or at 2-1374.