We welcome a guest post this week from Nuala Droney and James Nault, who are members of Robinson + Cole’s Intellectual Property Litigation Practice Team.

This week, the United States Senate passed the Defend Trade Secrets Act of 2016, which, if passed by the House and signed into law by President Obama, would give trade secret owners, including manufacturers, a federal private right of action for theft of trade secrets for the first time.  The law provides for the award of damages for trade secret theft as well as injunctive relief.  It even includes a provision allowing a court to grant ex parte expedited relief to trade secret owners under extraordinary circumstances to preserve evidence or prevent dissemination of the trade secret.  The ex parte provision, as DuPont’s Chief Intellectual Property Counsel put it in a Senate hearing, “enables a trade secret owner under limited, controlled conditions, to proactively contain a theft before it progresses and the trade secret is lost.”

Trade secrets are a form of intellectual property that are of increasing importance to many manufacturers for a variety of reasons.  A trade secret can be any information that is (i) valuable to a company, (ii) not generally known, and (iii) not readily ascertainable through lawful means, as long as the trade secret holder has taken reasonable precautions to protect it.  A classic example of a trade secret is the formula for Coca-Cola.  A more recent example is DuPont’s innovative Kevlar product, which was the subject of a large scale trade secret theft in 2006.  Trade secret theft is a huge problem; a recent Pricewaterhouse-Coopers study showed that trade secret theft costs American businesses $480 billion a year.

To sue someone for trade secret theft, a trade secret owner must prove that (i) the information stolen qualifies for  trade secret protection (i.e. it meets the above definition), (ii) the trade secret owner took reasonable precautions to protect the information, and (iii) the alleged thief misappropriated the trade secret, i.e. took it unlawfully, or as one legal textbook puts it, “through deception, skullduggery, or outright theft.”  Robert P. Merges, Peter S. Menell, and Mark A. Lemley, Intellectual Property in the New Technological Age, Revised Fourth Edition 2007.  And while there are federal claims for the theft of other forms of intellectual property, such as claims for patent or copyright infringement, traditionally trade secret theft has been the exclusive domain of state law.  This is despite the fact that interstate or international trade secret theft has been a federal crime since 1996.  If it becomes law, the Defend Trade Secrets Act of 2016, would give manufacturers a direct route to federal court to defend their trade secrets.

 

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Photo of Jeffrey White Jeffrey White

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or…

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or family owned manufacturers. For those looking for my detailed law firm bio, click here.

I am often asked why I have focused a large part of my law practice on counseling manufacturers and distributors. As with most things in life, the answer to that question is tied back to experiences I had well before I became a lawyer. My grandfather spent over 30 years working at a steel mill (Detroit Steel Company), including several years in its maintenance department. One of my grandfather’s prime job duties was to make sure that the equipment being used was safe. In his later years, he would apply those lessons learned in every project we did together as he passed on to me his great respect and pride for the manufacturing industry.

Because of these experiences, I not only feel comfortable advising executives in a boardroom, but also can easily transition to the factory floor. My experience has involved a range of industries, including aerospace and defense, chemicals, energy, pharmaceuticals and life sciences, nutritional and dietary supplements, and retail and consumer products. While I have extensive experience in litigation (including product liability and class actions), I am extremely proactive about trying to keep my clients out of the courtroom if at all possible. Specifically, I have counseled manufacturers and distributors on issues such as product labeling and warranties, product recalls, workplace safety/OSHA, anti-trust, and vendor relations, among other things. I always look for the business-friendly solution to a problem that may face a manufacturer or distributor and I hope this blog will help advance those efforts.