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Trading Secrets A Law Blog on Trade Secrets, Non-Competes, and Computer Fraud

U.S. House of Representatives Passes Theft of Trade Secrets Clarification Act

Posted in Data Theft, Espionage, Legislation, Trade Secrets

By Robert Milligan and Jessica Mendelson

The United States House of Representatives approved the Theft of Trade Secrets Clarification Act today under a suspension of the House Rules, a process intended to expeditiously resolve non-contentious measures. The Act broadens federal law to ensure it addresses the theft of trade secrets related to a product or service used or intended to be used in interstate or foreign commerce.

Under House Rule XXVII, the Speaker of the House for the United States House of Representatives is permitted to suspend the House Rules and expeditiously resolve non-controversial measures in the last six days of a congressional session. In order to suspend the rules, two thirds of present and voting members of the House must approve the suspension, and amendments are not permitted unless they were submitted at the time the motion to suspend the rules is offered. Once a motion to suspend has been brought, the bill is debated for up to forty minutes, with twenty minutes of debate given to a representative who supports the bill, and twenty minutes given to a member who opposes the bill. A vote is then ordered, and the suspension can be issued.

This year, the suspension list included S.3642, the Theft of Trade Secrets Clarification Act of 2012, which recently passed in the Senate. The Act is intended to strengthen the scope of the Economic Espionage Act to prevent results like the Second Circuit’s decision in United States v. Aleynikov, which we previously discussed. Under the Economic Espionage Act, only trade secrets “related to or included in a product that is produced for or placed in interstate commerce” are protected. The Second Circuit interpreted this provision narrowly in Aleynikov, and found it only protected actual products placed in interstate or foreign commerce. The court would not apply the law because the trade secret failed to satisfy the interstate or foreign commerce requirement. The passage of the Theft of Trade Secrets Clarification Act expands the Economic Espionage Act to cover trade secrets “related to a product or service used in or intended for use in interstate or foreign commerce.”  (emphasis added). This means that the Economic Espionage Act will now protect a broader range of trade secrets, including trade secrets with a relationship to a product or service intended for interstate or foreign commerce.  Furthermore, the Theft of Trade Secrets Clarification Act attempts to correct the Aleynikov loophole. The bill  moved under suspension of House Rules on Tuesday, December 18, and passed 388-4. It will now go directly to the White House for President Obama’s signature. We will continue to keep you posted on the bill’s progress.