Bensen on the Economic Espionage Act & the Uniform Trade Secret Act

In May of 2012, the FBI set up billboards with a simple message: "$13 Billion Lost, Protect America's Trade Secrets." The purpose of the unusual campaign was to draw attention to the growing problem of state-sponsored espionage targeted at U.S. companies. Increased awareness of the problem can be expected to result in an increased number of prosecutions under the Economic Espionage Act. In this Analysis, Eric E. Bensen discusses the Economic Espionage Act & the Uniform Trade Secret Act. He writes:

Background & Overview

     Trade secrets are a creature of state law. Historically, states largely followed the Restatement of Torts § 757 (1939) with respect to trade secret misappropriation. The National Conference of Commissioners on Uniform State Laws completed the UTSA in 1979 and amended it 1985. The general purpose of the UTSA is to make the law respecting trade secrets uniform among the enacting states. The UTSA provides for injunctive relief and damages for the unauthorized acquisition, use or disclosure of another's trade secret. As of 2012, 46 states and the District of Columbia had adopted the UTSA or a variation of it.

     The EEA was passed in 1996 at a time when there were increasing threats to corporate security from international and domestic economic espionage brought on in part by the end of the Cold War, which resulted in former government spies heading to the private sector to perform illicit work for businesses. The purpose of the EEA was to provide a comprehensive federal remedy directed to the theft of trade secrets. The Act provides criminal sanctions for the theft of a trade secret for the benefit of a foreign government and for the theft of trade secrets used in connection with interstate commerce.

     Generally, the UTSA's definition of "trade secret" and the EEA's definition of "trade secret" both broadly define the types of information that can be subject to trade secret protection, impose a "reasonable measures" requirement, under which a trade secret must have been subject to reasonable efforts to protect its confidentiality, and an "independent economic value" requirement, under which a trade secret must be shown to have derived economic value from not being generally known to, or readily ascertainable by lawful means by, those who could obtain economic value from its disclosure or use. Accordingly, UTSA decisions (and, since the UTSA itself drew heavily from common law, common law trade secret decisions) will oftentimes be pertinent to an EEA proceeding and can provide substantial guidance on the EEA's subject matter, reasonable measures and independent economic value requirements.

     There are, not surprisingly, differences between the UTSA and EEA. Most notably, while the UTSA is silent as to attempted misappropriation and conspiracy to misappropriate, the EEA expressly prohibits attempted trade secret theft and conspiracy to steal trade secrets. In the context of attempted trade secret theft and conspiracy to steal trade secrets, the very nature of trade secret protection has raised interesting questions as to the proper threshold for criminal liability.

     Lastly, just as a court in a civil action can by way of a protective order impose procedures on the parties to protect the confidentiality of a trade secret, the EEA authorizes a court to enter a protective order consistent with the requirements of the Federal Rules of Criminal Procedure and Federal Rules of Civil Procedure to protect the confidentiality of trade secret information. Accordingly, decisional law addressing the protection of trade secrets under Federal Rule of Civil Procedure 26 is a valuable resource for courts and practitioners in EEA actions.

(citations omitted)

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Comments

Anonymous
Anonymous
  • 06-17-2012

Hello; This is a really important service for the entire commercial community. The information is timely and well presented. Thank you very much for this fine work. We look forward to the same excellent quality in the future. Thanks again. Jim Rush corporate espionage