New Legislation: Trade Secret Theft

January 8, 2013
Categories: Intellectual Property, Trade Secret Theft

Trade secret theft costs multinational corporations billions of dollars per year. Case in point: Ford Motor Company lost approximately $50 million when an engineer disclosed trade secrets to a Chinese competitor. The General Motors Company also had approximately $40 million in hybrid technology documents stolen by its own engineers.

The misappropriation of trade secrets is a challenging issue. The theft of valuable intellectual property (IP) can seriously hamper a company’s ability to compete. To combat this issue, the Obama Administration has put forth several legislative recommendations to Congress. Over the past few weeks, two were enacted into law.

The first, S. 3642 or the Theft of Trade Secrets Clarification Act of 2012, was signed by President Barack Obama on December 28, 2012. This law clarifies the Economic Espionage Act of 1996 to include the theft of trade secrets for any products or services used in interstate commerce, not just those products that are produced specifically for interstate commerce. The clarification was made in response to the United States v. Aleynikov case where the defendant was acquitted because his stolen property was not produced to be placed in interstate commerce.

The second law, H.R. 6029 or the Foreign Economic Espionage Penalty Enhancement Act of 2012, was passed by the House of Representatives on January 1, 2013 and is awaiting the signature of President Obama. This law increases the penalties and criminal fines associated with stealing corporate trade secrets for a foreign government.

These developments are an important step in protecting intellectual property and creating a fair business environment that fosters innovation and creativity. Government initiatives can only go so far – companies can also play a role towards increasing levels of compliance, particularly in high-risk countries where trade secrets are most vulnerable.

At the Center for Responsible Enterprise and Trade (CREATe), we work with companies to ensure their suppliers and business partners protect their intellectual property through CREATe Leading Practices for Intellectual Property Protection. CREATe offers tools and training to help companies develop processes and frameworks to ensure they can meet their commitment to protect and appropriately manage intellectual property.


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