Obama Administration Releases Plan to Mitigate Theft of Trade Secrets | Practical Law

Obama Administration Releases Plan to Mitigate Theft of Trade Secrets | Practical Law

The Obama administration has released its Administration Strategy on Mitigating the Theft of U.S. Trade Secrets. The strategy was released in response to the increase in economic espionage and trade secret theft against US corporations.

Obama Administration Releases Plan to Mitigate Theft of Trade Secrets

Practical Law Legal Update 6-524-3533 (Approx. 4 pages)

Obama Administration Releases Plan to Mitigate Theft of Trade Secrets

by PLC Labor & Employment
Published on 22 Feb 2013USA (National/Federal)
The Obama administration has released its Administration Strategy on Mitigating the Theft of U.S. Trade Secrets. The strategy was released in response to the increase in economic espionage and trade secret theft against US corporations.
On February 20, 2013, the Obama administration released its Administration Strategy on Mitigating the Theft of U.S. Trade Secrets. The strategy was released in response to the increase in economic espionage and trade secret theft against US corporations. It recognizes the crucial role of trade secrets in the US economy, and identifies two main avenues of attack that the US must address:
  • Foreign competitors of US corporations, some with ties to foreign governments, are increasing their efforts to steal trade secret information by recruiting current or former employees.
  • US companies, law firms, academia and financial institutions are experiencing cyber intrusion against electronically stored trade secret information.
The strategy sets out a five-prong plan to protect US trade secrets:
  • Focus diplomatic efforts to protect trade secrets overseas. The administration will continue to apply sustained and coordinated diplomatic pressure on other countries to discourage trade secret theft and minimize unfair competition against US companies.
  • Promote voluntary best practices by private industry to protect trade secrets. The US Intellectual Property Enforcement Coordinator (IPEC), working with appropriate US government agencies (including the Departments of Justice and State) will facilitate efforts by organizations and companies to develop industry-led best practices to protect trade secrets. The best practices are intended to assist businesses in safeguarding information they wish to keep secret and are not designed to be a minimum standard of protection. The administration encourages organizations and companies to examine internal operations and policies to determine if current approaches are mitigating the risks and factors associated with trade secret misappropriation committed by corporate and state sponsors. Areas that private industries could consider for voluntary best practices include:
    • research and development compartmentalization;
    • information security policies;
    • physical security policies; and
    • human resources policies.
  • Enhance domestic law enforcement operations. Since the 2010 establishment of the Attorney General's Task Force on Intellectual Property, the Federal Bureau of Investigation (FBI) increased the number of its trade secret theft investigations under the Economic Espionage Act by 29%. The Department of Justice and the FBI will continue to prioritize the investigation and prosecution of corporate and state-sponsored trade secret theft and to fight computer intrusions by hackers. In addition, law enforcement and intelligence information sharing should take place between the following agencies:
    • the Office of the Director of National Intelligence (ODNI);
    • the Department of Justice;
    • the National Intellectual Property Rights Coordination Center; and
    • the Department of Defense.
  • Improve domestic legislation. The administration's 2011 White Paper on Intellectual Property Enforcement Legislative Recommendations recommended legislation to increase the statutory maximum sentence for economic espionage (18 U.S.C. § 1831) and to direct the US Sentencing Commission to consider increasing the US Sentencing Guideline range for the theft of trade secrets and economic espionage, including trade secrets transferred or attempted to be transferred outside the US. The white paper supported the efforts of Congress to introduce legislation to improve the protection of trade secrets in the 112th Congress. As a result, President Obama signed two important pieces of legislation into law that will have an immediate and positive impact on prospective trade secret prosecutions:
    • Public Law 112-236, The Theft of Trade Secrets Clarification Act of 2012 (S. 3642), which closed a loophole in the Economic Espionage Act that had allowed the theft of valuable trade secret source code (for more information, see Legal Update, President Obama Signs Theft of Trade Secrets Clarification Act); and
    • Public Law 112-269, The Foreign and Economic Espionage Penalty Enhancement Act of 2012 (H.R. 6029/S. 678), which bolstered criminal penalties for economic espionage and directed the sentencing commission to consider increasing offense levels for trade secret crimes.
  • Public awareness and stakeholder outreach. To help mitigate the theft of trade secrets, the administration will encourage all stakeholders, including the general public, to be aware of the detrimental effects of misappropriation on trade secret owners and the US economy in general.