Pattishall IP Blog

May 2, 2014

Defend Trade Secrets Act Would Create Federal Private Right-of-Action For Trade Secret Misappropriation Under Economic Espionage Act

Filed under: Trade Secret — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 10:59 am

PB LR

 

by Phillip Barengolts, Partner

 

On April 29, Senators Orrin Hatch and Chris Coons introduced the Defend Trade Secrets Act, which would create a federal private right-of-action under Economic Espionage Act.

Currently, claims for trade secret misappropriation generally are brought in state courts regardless of the scope of the misappropriation. The resulting state-by-state protection can create problems for trade secret owners in developing global non-disclosure policies required to maintain protection for these extraordinarily valuable assets, which include secret formulas, customer lists, manufacturing techniques, business processes, advertising strategies and sales methods.

The Defend Trade Secrets Act would amend the Economic Espionage Act to provide an owner of a trade secret with significant remedies for misappropriation, including:

  • the ability to obtain an ex parte order to: a) copy electronically stored information from the alleged thief to preserve evidence of the misappropriation; and b) seize “any property used, in any manner…to commit or facilitate the” misappropriation;
  • injunctions to protect the trade secret;
  • damages for actual losses plus unjust enrichment to the extent not compensated by the award of actual losses, or a reasonable royalty in lieu of damages; and
  • if the misappropriation is willful or malicious, exemplary damages of no more than 3 times the actual damages or reasonable royalty awarded.

The requirements for the seizure order will follow those under the Lanham Act.

If the Defend Trade Secrets Act ultimately becomes law, it would provide businesses with a significant tool to protect their valuable intellectual property. Given the bipartisan support, it stands a good chance. In the meantime, companies seeking to protect their trade secrets will continue to rely upon the state-by-state protection currently in place.

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Phillip Barengolts is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois. Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, trade secret and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues. Mr. Barengolts’ practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, unfair competition, trade secret, Internet, and copyright law. He teaches trademark and copyright litigation at John Marshall Law School, and co-authored Trademark and Copyright Litigation, published by Lexis Publishing.

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July 9, 2009

Sanjiv Sarwate, Chicago Trademark Attorney, Details Recent Eighth Circuit Decision Denying Preliminary Injunction in Trade Secret Litigation

Filed under: Trade Secret — Tags: , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:00 pm

By Sanjiv Sarwate, Trademark Attorney

On May 29, 2009, the Eight Circuit upheld the trial court’s refusal to enter a preliminary injunction in CDI Energy Services, Inc. v. West River Pumps, Inc., 567 F.3d 398.  CDI sells services and equipment for use in the oil field industry.  West River Pumps was established by three former CDI employees, who had been recruited by CDI to operate a CDI field office in Dickinson, North Dakota.  While still employed by CDI, the three employees founded West River and began to solicit CDI’s clients in the area.  Subsequently, the employees resigned from CDI, and CDI filed suit, alleging that West River’s founders misappropriated CDI’s confidential customer data and breached their duty of loyalty to CDI by soliciting business for West River while still employed by CDI. (more…)

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