Obama Administration Issues Strategy to Mitigate the Theft of U.S. Trade Secrets

By Joseph S. Heino

Far too many U.S. businesses know first-hand the implications of trade secret theft and have been combatting this costly issue for years. In a recent effort to protect American innovation globally, the Obama Administration issued a strategy for mitigating the theft of U.S. trade secrets. While it’s possible that this effort could discourage some would-be thieves, the burden remains on the businesses to protect themselves or else risk losing their intellectual property. The question for many is whether this strategy may help or instead hinder a business’ efforts to self-protect.

The five general mandates issued by the Administration for implementation of its strategy are:

1. Focus diplomatic efforts to protect trade secrets overseas;
2. Focus diplomatic efforts to protect trade secrets overseas;
3. Enhance domestic law enforcement operations;
4. Improve domestic legislation; and
5. Public awareness and stakeholder outreach.

The mandates are extremely broad and require federal intervention into an area of intellectual property that has traditionally been left to protection at the state level. In short, no federal trade secret legislation exists. Although a “Uniform Trade Secrets Act” was promulgated back in 1979, each state has been free to (i) enact legislation to adopt the Act as is, (ii) enact legislation to adopt the Act in a modified form, or (iii) reject it outright and simply rely on the courts for the continued development of common law trade secret protections.

The biggest hurdle to the implementation of these mandates, however, is the realization that prosecution and enforcement is left to the federal government. In fact, a business may be asked to refrain from bringing a civil action against a culpable party while the government investigates and prepares a case for prosecution, thus hampering a business’ right to civil remedies. Further, if the government successfully pursues prosecution, recovery goes to the government, not to the business whose trade secrets have been misappropriated. Indeed, there is no guarantee that the government will even pursue prosecution once its investigation has been completed.

While the threat of government intervention may help deter would-be offenders, the best advice to business owners is that they continue to refine and implement the steps that would normally be taken to self-protect their trade secrets.

The full text of the strategy can be found here.

If you have any questions regarding the potential implications of this strategy on your business or on self-protecting your intellectual property, please contact your Davis & Kuelthau attorney or the author, Joseph S. Heino, at 414.225.1452 / jheino@dkattorneys.com.