March 23, 2016

Stealing America’s trade secrets

The op-ed below by GIPC President and CEO David Hirschmann was originally published in The Washington Times on March 18, 2016. For the full text, please click here

The Defend Trade Secrets Act protects American innovation and jobs

American innovation has brought consumers across the globe many of the cutting edge products and technologies that have, quite literally, changed the world. From life-saving medicines to computer software to incredibly efficient ways to generate energy, American companies are at the forefront of the “innovation economy” and the creators of millions of domestic jobs.

But our position as a global leader in innovation is under attack. Individuals, organizations and even some countries, want to take shortcuts and gain a competitive edge by stealing our ideas and manufacturing know-how — the “secret-sauce” that separates American industry from those who seek to duplicate our success. This theft of America’s trade secrets is a growing — and increasingly alarming — threat to our economic security.

What separates a Coca-Cola from a store-brand counterpart is its secret formula, and Kentucky Fried Chicken relies on its unique blend of 11 herbs and spices to distinguish itself in the market. Both are examples of trade secrets.

But trade secrets are also used to designate propriety manufacturing processes or highly technical algorithms for biologic formulas that may one day be eligible for patent protections. This form of intellectual property (IP) encompasses a wide range of information and processes across virtually every industry sector and among companies large and small.

Trade secrets are often the crown-jewels of a small, innovative start-up that has neither the expertise nor budget to seek patent protection because their limited capital is spent developing the next big idea and putting people to work building the next must-have product.

The Defend Trade Secrets Act currently under consideration in Congress would give American companies another tool to fight trade secrets theft.

This is a rare piece of legislation with broad and diverse support. Introduced by Sens. Orrin Hatch, Utah Republican and Chris Coons, Delaware Democrat, and Reps. Doug Collins, Georgia Republican and Jerrold Nadler, New York Democrat this is a truly bipartisan and bicameral bill. Currently, the bill enjoys the support of 62 senators and 127 representatives, along with thousands of companies, industry associations, and think tanks.

As well stated by White House Intellectual Property Enforcement Coordinator Daniel Marti, “Trade secret theft is a serious and pervasive problem that threatens the economic health and competitiveness of this country. The Administration is committed to protecting the innovation which drives the American economy and supports American jobs.”

Examples include foreign nationals digging new hybrid seeds out of cornfields in the heartland, embedded employees walking out the door with proprietary manufacturing processes, and hackers downloading secret research data. Once in possession of the trade secret, criminals want to get out of Dodge fast, and will typically flee the country to peddle these precious corporate assets to the highest bidder. To stop such theft, companies must be able to act quickly and effectively.

Unfortunately, current remedies alone are not enough to prevent the flight of these thieves. While law enforcement is a willing partner and often very helpful, too often they lack the bandwidth or resources to act quickly enough and stop these criminals before it’s too late.

Currently, a patchwork of state laws and federal criminal penalties are available to companies or individuals confronted with trade secrets theft. The Defend Trade Secrets Act creates a federal civil cause of action that currently does not exist.

Creating a new federal civil cause of action will help industry help itself. The bill has many provisions to make sure that this new federal cause of action is not abused and employees are protected — including whistleblowers.

In an increasingly competitive global marketplace, it is critical that the right tools are in place to ensure that American ideas and jobs are not stolen and sold overseas. The U.S. Chamber of Commerce urges Congress to move this much needed legislation quickly so that it may become law and our industry and workers can remain at the forefront of the innovation economy.

David Hirschmann is the President and CEO of the U.S. Chamber of Commerce’s Global Intellectual Property Center.

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