Rep. Nadler Praises Passage of the Defend Trade Secrets Act of 2016 by the US House of Representatives

Apr 27, 2016 Issues: Civil Liberties, Jobs, Labor and the Economy

WASHINGTON, D.C. -- Congressman Jerrold Nadler (NY-10), Ranking Member of the House Judiciary Subcommittee on the Courts, Intellectual Property and the Internet, praised today’s passage by the House of Representatives of S. 1890, the Defend Trade Secrets Act of 2016.  Rep. Nadler was the lead Democratic cosponsor of H.R. 3326, the House companion bill.

“I was pleased by today’s passage of the bipartisan Defend Trade Secrets Act of 2016 by the House of Representatives,” said Congressman Nadler.  “In today’s digital environment, it has never been easier to transfer trade secrets across the globe with the click of a cell phone, tablet, or computer key. As the lead Democratic cosponsor of the House companion bill, I have worked with a wide variety of stakeholders to reach consensus on this legislation, and I look forward to seeing the President sign it into law.”

The Defend Trade Secrets Act would create a uniform federal civil cause of action for misappropriation of trade secrets.  It is estimated that the American economy loses as much as $300 billion per year due to trade secret theft, but the current patchwork of federal and state laws has proven inadequate to protecting businesses from theft of this valuable intellectual property.  The Senate passed S. 1890 on April 4, 2016 by a vote of 87-0 and the bill now goes to President Obama for his signature.

Congressman Nadler's statement, as prepared for delivery on the House Floor, follows below:

"Mr. Speaker, I rise in strong support of S. 1890, The Defend Trade Secrets Act of 2016.  This long overdue legislation would protect businesses across the country from the growing threat of trade secret theft by creating a uniform federal civil cause of action for misappropriation of trade secrets.

"Trade secrets are proprietary business information that derive their value from being and remaining secret.  This includes secret recipes, software codes and manufacturing processes – information that, if disclosed, could prove ruinous to a company.  As the United States economy becomes more and more knowledge- and service-based, trade secrets are increasingly becoming the foundation of businesses across the country, with one estimate placing the value of trade secrets in the U.S. at $5 trillion.

"Unfortunately, with such fortunes resting on trade secrets, theft of this valuable intellectual property is inevitable.  And in today’s digital environment, it has never been easier to transfer the stolen property across the globe with the click of a button.  By one estimate, the American economy loses annually as much as $300 billion or more due to misappropriation of trade secrets, leading to a loss of up to 2.1 million jobs each year.

"With so much at stake, it is absolutely vital that the law include strong protections against theft of trade secrets.  However, our current patchwork of federal and state laws has proven inadequate to the job.  While the federal government may bring criminal prosecutions and move for civil injunctions, this power is rarely exercised, and often fails to adequately compensate the victims.

"The states provide civil causes of action for victims of theft, with money damages available, but this system has not proven efficient or effective for incidents that cross state, and sometimes international, borders.  Once upon a time, trade secrets might have been kept in a file cabinet somewhere, and would-be thieves would have to spirit away a physical copy, making it likely that they would be caught before crossing state lines.  But, today, trade secrets can be loaded onto a thumb drive and mailed out-of-state, or even sent electronically anywhere across the globe in an instant.

"Pursuing a defendant, and the evidence in dispute, across state lines presents a host of challenges for victims of trade secret theft, particularly when time is of the essence, and the need for a federal solution is clear.  The Defend Trade Secrets Act fills this gap by creating a uniform federal civil cause of action for theft of trade secrets.  It also provides for expedited ex parte seizure of property, but only in extraordinary circumstances, where necessary to preserve evidence or prevent dissemination.

"As the lead Democratic cosponsor of H.R. 3326, the House companion to this legislation, I am very pleased that this bill is on the floor today and I want to thank everyone who has worked so hard over the last several years to bring us to this point.  In particular, I want to thank the sponsor of H.R. 3326, the Gentleman from Georgia, Mr. Collins, as well as Ranking Member Conyers, Chairman Goodlatte, and the Gentleman from New York, Mr. Jeffries.  I also appreciate the sponsors of S. 1890, Senators Hatch and Coons, for all of their work on this legislation.

"The bill we are considering today represents the culmination of over two years of negotiations with various stakeholders and has strong bipartisan support, with 162 cosponsors in the House and 65 cosponsors in the Senate.  This is good legislation that carefully balances the rights of defendants and the needs of American businesses to protect their most valuable assets.  The Senate passed the bill 87-0 and, with passage today, we can send it straight to the President’s desk.  I urge my colleagues to support the bill, and I yield back the balance of my time.

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