Earlier this week, the House Judiciary Committee took an important step in the effort to create a federal right of action for the misappropriation of a trade secret.  We have blogged before on this legislation. On Wednesday, the Committee voted to approve the legislation. 

Led by Chairman Bob Goodlatte (R-VA), the Committee marked up H.R. 5233, the Trade Secrets Protection Act, the bipartisan bill introduced by Rep. George Holding (R-NC) and Rep. Jerrold Nadler (D-NY); there is bipartisan companion legislation in the Senate Judiciary Committee.  The bill enjoys the cosponsorship of key committee members on both sides of the political aisle.

The legislation would amend the federal Economic Espionage Act to include a federal civil remedy for victims of trade secret misappropriation.  The existing federal law is a criminal statute that does not provide a civil remedy to parties whose property has been taken.

The federal legislation is modeled on the Uniform Trade Secrets Act, adopted in 48 states, and includes a narrowly tailored seizure provision to prevent a party who has stolen a trade secret from fleeing with stolen know-how. 

During the Committee’s consideration, the bill’s sponsor offered an amendment to clarify the seizure provision’s application only to the person who took the trade secret through improper means and to require a biennial study by the Attorney General and the White House Intellectual Property Enforcement Coordinator that would include recommendations for further steps that could be taken to enhance legal protections against international trade secret thefts. 

A second amendment was offered to strip-out the seizure provisions entirely on the basis that the provision could be subject to abuse and might especially harm start-ups.  The proponents of the legislation argued in response that the seizure provision was carefully crafted and quite limited.  The proponents persuaded the Committee members that there was no viable strategy for misusing the provision given the numerous safeguards included, but that the provision was necessary to stop a thief heading to the airport to fly overseas and sell American know-how. 

The Committee rejected the amendment, and then voted to report the bill favorably to the full House on a voice vote, with no member heard to dissent.  With the House planning to adjourn until after the upcoming elections, no further action is likely to occur until Congress reconvenes after the elections.