New Legislation: A Golden Age for Trade Secret Trolls?

November 23, 2015 Benjamin Kusiak

troll.jpgCompanies in recent decades have been beleaguered by cyber espionage and theft of proprietary materials and trade secrets. Most states have statutes creating a cause of action for companies to seek redress for these wrongs but currently no parallel cause of action exists at the federal level. This past July, the Defend Trade Secrets Act of 2015 (DTSA) was reintroduced into both houses of Congress. This bill, a previous version of which stalled and died in the 2014 Congress, creates a cause of action in federal court to give greater weight to those companies and individuals fighting cybercrime.

The DTSA (the House version found here) utilized Congress’ commerce powers clause to enact this private civil right. Some of the highlights of the bill include the courts’ power to enact a civil seizure of property ex parte to prevent the propagation or dissemination of misappropriated secrets. Further, plaintiff will be eligible to receive injunctive relief, monetary damages, attorney’s fees, and, in cases of willful misappropriation, punitive damages.  All in all, Congress believes that increasing the economic side effects of corporate espionage will help deter theft of trade secrets.

The bill, despite its worthy goals, is still opposed by many in the intellectual property world.  When the previous version of the bill was introduced last year, critics argued that the downsides of the legislation may actually outweigh the benefits that it creates. The ex parte nature of the seizure power is particularly troubling, along with an embedded assumption of harm and inevitable disclosure language in the bill.  These critics argue that the DTSA would allow “trade secret trolls” to begin plaguing industry to a worse extent than patent trolls.

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