Clampdown on trade secret theft seen passing U.S. Congress

[April 27, 2016]  By Richard Cowan
 
 WASHINGTON (Reuters) - Corporate trade secrets, including manufacturing processes and computer methods, would enjoy greater legal protections against theft under legislation expected to be approved by the U.S. Congress on Wednesday.

The House of Representatives is poised to pass the "Defend Trade Secrets Act" on the heels of being unanimously approved by the Senate earlier this month.

The Obama administration has expressed strong support for the measure that would for the first time allow companies to sue in federal court for damages related to theft of trade secrets. White House backing has eased the way for the legislation's likely enactment into law.

Theft of intellectual property, including trade secrets, is estimated to cost American firms more than $300 billion a year, according to a 2013 report by the Commission on the Theft of American Intellectual Property.

Trade secret theft already is a federal crime, but without the right to sue in federal court, companies must seek redress in state courts amid a patchwork of state laws.

Corporations such as Boeing Co and Johnson & Johnson, as well as the U.S. Chamber of Commerce and computer software lobbyists representing companies such as Apple Inc and Microsoft Corp, have pushed for the enhanced protections.

Backers of the legislation have cited a case last year in which a South Korean company, Kolon Industries, was found guilty in U.S. federal court of conspiracy to steal trade secrets from DuPont.

The foreign firm was ordered to pay $85 million in criminal fines and $275 million in restitution for illegally obtaining information on the chemical company's Kevlar body armor, which resulted in nearly $1 billion in economic losses for DuPont, according to lawmakers.

In allowing civil suits in federal court for illegal procurement of trade secrets including manufacturing processes, formulas, computer algorithms, industrial designs, business strategies and customer lists, the legislation aims to create uniform standards for what constitutes trade secret theft.

"In today’s digital environment, it has never been easier to transfer trade secrets across the globe with the click of a cell phone, tablet, or computer key," said Representative Jerrold Nadler, the leading Democratic co-sponsor of the legislation.

(Reporting By Richard Cowan; Editing by Alan Crosby)

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