Protection of Trade Secrets: Overview of Current Law and Legislation. Brian T. Yeh, Legislative Attorney. September 5, 2014.

“A trade secret is confidential, commercially valuable information that provides a company with a competitive advantage, such as customer lists, methods of production, marketing strategies, pricing information, and chemical formulae. (Well-known examples of trade secrets include the formula for Coca-Cola, the recipe for Kentucky Fried Chicken, and the algorithm used by Google’s search engine.) To succeed in the global marketplace, U.S. firms depend upon their trade secrets, which increasingly are becoming their most valuable intangible assets. However, U.S. companies annually suffer billions of dollars in losses due to the theft of their trade secrets by employees, corporate competitors, and even foreign governments. Stealing trade secrets has increasingly involved the use of cyberspace, advanced computer technologies, and mobile communication devices, thus making the theft relatively anonymous and difficult to detect. The Chinese and Russian governments have been particularly active and persistent perpetrators of economic espionage with respect to U.S. trade secrets and proprietary information. In contrast to other types of intellectual property (trademarks, patents, and copyrights) that are governed primarily by federal law, trade secret protection is primarily a matter of state law. Thus, trade secret owners have more limited legal recourse when their rights are violated. State law provides trade secret owners with the power to file civil lawsuits against misappropriators. A federal criminal statute, the Economic Espionage Act (EEA), allows U.S. Attorneys to prosecute anyone who engages in “economic espionage” or the “theft of trade secrets.” The EEA’s “economic espionage” provision punishes those who misappropriate trade secrets with the intent or knowledge that the offense will benefit a foreign government, instrumentality, or agent. The EEA’s “theft of trade secrets” prohibition is of more general application, involving the intentional theft of a trade secret related to a product or service used in or intended for use in interstate or foreign commerce, with the intent or knowledge that such action will injure the trade secret owner. In addition to criminal enforcement of the statute, the EEA authorizes the Attorney General to bring a civil action to obtain injunctive relief against any violation of the EEA. However, because the U.S. Department of Justice and its Federal Bureau of Investigation have limited investigative and prosecutorial resources, as well as competing enforcement priorities, some observers assert that the federal government cannot adequately protect U.S. trade secrets from domestic and foreign threats. They have urged Congress to adopt a comprehensive, federal trade secret law in order to promote uniformity in trade secret law throughout the United States and to more effectively deal with trade secret theft that crosses state and international borders (a challenging problem for state courts to address). Among other things, they support the establishment of a federal civil cause of action for trade secret misappropriation, to allow U.S. companies to obtain monetary and injunctive relief when their trade secret assets are stolen.”