WASHINGTON — Critics of a bill passed by the U.S. Senate to standardize trade secret laws across state lines remain concerned in the wake of its passage.
The legislation expands the Economic Espionage Act, allowing private companies or individuals to sue in federal court for theft of trade secrets when it occurs across state lines or internationally. That right had previously been reserved for the Department of Justice, leaving most trade secret suits to often disparate state laws.
“The Defend Trade Secrets Act is unlikely to achieve the goals stated by its sponsors – preventing cyber-espionage and creating a uniform law to govern trade secrets,” said Christopher Seaman, an associate professor at Washington and Lee University School of Law. Seaman has raised concerns about the bill since it was first considered two years ago.
The problem, the law professor says, is that the bill doesn’t actually address international cyber-espionage, focusing instead on punishing state-to-state theft of trade secrets.
That could change despite the bill’s approval in the Senate, as similar legislation awaits Judiciary subcommittee review in the House.
Proponents of the Senate bill said it would bring about changes sorely needed to prevent corporate spying.
“Under current law, companies have few legal options to recover their losses when trade secrets are stolen,” Utah Republican Sen. Orrin Hatch, the bill’s sponsor and co-author, said in a news release.
“For example,” Hatch said, “if a disgruntled employee steals a Utah company’s confidential information and leaks it to a competitor in Colorado, attorneys must navigate a complex labyrinth of state laws just to bring suit. This cumbersome process can take weeks, which is an eternity in a trade secrets case.”
But while Seaman and other critics acknowledged the need to protect trade secrets from espionage, they’re skeptical that this step actually addresses the biggest problem: Foreign-based cybercrime.
“It’s unlikely that the addition of a civil cause of action is going to meaningfully deter foreign hackers, who are already subject to criminal liability under the federal Computer Fraud and Abuse Act as well as the Economic Espionage Act,” Seaman said in an email exchange.
It’s a problem the bill is supposed to address. Sen. Christopher Coons, the Delaware Democrat who co-authored the bill, wrote in January that “In today’s electronic age, trade secrets can be stolen with a few keystrokes, and increasingly, they are stolen at the direction of a foreign government or for the benefit of a foreign competitor.”
But Seaman says the right to sue in federal court doesn’t actually affect foreign cybercriminals.
“Foreign-based hackers often take extensive efforts to conceal their identity,” Seaman said. “Even when they are identified, they are usually outside the reach of U.S. law.” He says the solution isn’t to change the law, but to fight the crime directly through better technological security.
Critics also worry that the bill could be used to stifle competition — in particular, language that would allow a trade secret owner to seek a court order to seize property of a suspected thief.
In a letter last November, signed by Seaman and 41 other law professors, critics of the bill claimed this “ex parte” provision does not define property, and could easily be abused.
Though amendments to the bill “provide for the narrowest seizure of property necessary to achieve (these) purposes,” the letter says it may “still result in significant harm” to unrelated businesses of alleged thieves. This is especially true, the law professors say, with small businesses and independent contractors.
Some senators, like Texas Republican Sen. John Cornyn, raised similar objections early on in consideration of the bill, leading to amendments that included a restriction narrowing property seizures. Cornyn later signed on as one of the 64 co-sponsors.
“I am proud that many of the senators who raised concerns are now co-sponsors,” Coons said Monday, shortly before the Senate approved the amended bill 87-0.
But the amendments don’t go far enough for the critics.
“The changes to that provision (property seizures) have been relatively minor and have not addressed its serious structural issues about how it will work and how it can be abused,” said Eric Goldman, a law professor at Santa Clara University who signed the 2015 letter. “Unfortunately, I don’t believe the provisions can be fixed, nor are they justified as a policy matter.”
Goldman says the only real option is to remove the provision entirely. “I remain hopeful the House will take a closer look at the ex parte seizure provision when it considers the bill,” Goldman said.