Anti-Chinese Hacking Trade Secret Bill Goes to Obama's Desk

By Jonathan R. Tung, Esq. on May 03, 2016 | Last updated on March 21, 2019

In these highly interconnected times, a company's intellectual property and trade secrets are more valuable than ever. With this in mind, both houses of Congress sent a bill which will, upon President Obama's signature, become the Defend Trade Secrets Act.

If passed, the newly minted federal law will open the door for companies to sue domestic and foreign violators in federal court in a streamlined litigation manner instead of having to navigate the state laws.

Loss of Billions of Dollars

There are few who doubt that the bill will be signed swiftly as the White House has voiced support for the new legislation. As always, it boils down to money. According to a 2013 study by the Commission on the Theft of American Intellectual Property, American firms lose about $300 billion per year due to the theft of intellectual property and trade secrets.

No doubt legislators were encouraged by the successful suit against the South Korean Kolon Industries which placed the foreign firm on $365 million in damages and fees for stealing trade secret information from DuPont related to Kevlar body armor.

The Click of a Button

Representative Jerrold Nadler (who helped co-author the bill) echoed the concerns that we earlier voiced: information has never before been so vulnerable to attack by unauthorized persons. "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," he said.

The International Trade Subtext

The main thrust of the legislation is to streamline the court process against foreign actors who would steal American companies R&D data, trade secrets, and other intellectual property; and it is no secret that China is the biggest violator by far. At least one study estimates that the Middle Kingdom is responsible for up to 80 percent of the IP theft against America.

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