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US Acts to Protect its Companies’ Trade Secrets

Source: Grill IP patents news

The US government has acted to protect the trade secrets of American companies, arguing that action is necessary especially in the light of increasing cyber espionage.

Trade secrets are not intellectual property in the sense of an innovation, but they describe certain ways of doing it… the “secret sauce” of a company, like Coca Cola’s secret formula or some specific workflow or process that may give a company a competitive advantage.

Until now, companies could only use state law to pursue those who stole their trade secrets. Now they can use the full – and uniform – power of federal law to gain compensation. The “Defend Trade Secrets Act”, has already been signed into law by US President Barack Obama, after gaining the overwhelming backing in both the US Senate and House of Representatives.

The new law does not replace existing trade law in individual US states – it complements it – but it means that companies don’t have to rely on state law anymore to protect their trade secrets, they can now go directly to federal courts. Before the law came into effect, there was no consistent US-wide approach to protecting trade secrets. The lack of a coherent federal standard also meant that companies could go jurisdiction shopping, trying to file lawsuits in states where local laws were likely to be most favourable to their claim. This has not gone away, as companies may choose to sue alleged violators of their trade secrets under state rather than federal legislation.

However, the new Defend Trade Secrets Acts has significance far beyond the borders of the United States, both for non-US companies and for employees of US companies working around the world, regardless of their nationality.

The act tries to ensure that employees who are lured away by competitors won’t take any trade secrets with them. Existing legislation, especially the Uniform Trade Secrets Act, already deals with some of these aspects, especially when it comes to key employees in the United States that have been dismissed or left a company. As with much US legislation – for example when it comes to anti-bribery rules – the new Defend Trade Secrets Act applies not only to US citizens, but to all workers employed by American companies. Whether you are a citizen of Finland, South Africa, Singapore or any other country, if you work for a US company and try to move on, you have to take special care that you can not be accused of having stolen – or accidentally taken with you – any trade secrets. The same holds true for any non-US citizens who are employed in the United States itself. So if you have saved any documents, spreadsheets, software code or other intellectual property owned by your current employer on your personal computer, smartphone, a USB stick or in the cloud, you will be obliged to return these documents to the company and delete any copies that you may hold.

The new law can also be interpreted as an attempt to extend the protection of US trade secrets well beyond the borders of the United States. It recognizes that today’s disputes over trade secrets usually don’t macth traditional geographic boundaries. In other words, US companies now can sue firms in Federal courts for allegedly stealing their trade secrets. With cyber espionage rampant and costing US companies reportedly billion of US dollars every year, foreign competitors may find themselves in court not just for patent but also for trade secret violations. President Obama did not point to any specific countries as main culprits for the theft of trade secrets, although experts believe that the new law may be aimed mainly at China and Russia above all others.

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Author: grill-ip

Grill IP is a non-profit project for educational and entertaining purposes only. Our aim is to provide quick and easy access to aggregated and original patent news, IP analysis, interesting business cases in IP, basic legal updates and a list of patent transactions.

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