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Trade-Secret Bill Breezes Through Senate Committee

WASHINGTON (CN) - Members of the U.S. Senate gave a push Thursday to a bill that helps corporations protect their trade secrets in the federal court system.

The Defend Trade Secrets Act, sponsored by Sens. Orrin Hatch, R-Utah, and Chris Coons, D-Del., would standardize trade-secret protection and allow companies to bring federal civil complaints against those accused of misappropriation.

Sen. Chuck Grassley, D-Iowa, noted at judiciary committee hearing on the bill Thursday that the pace of trade-secret theft is "mounting."

Since the Justice Department lacks the capacity to prosecute trade-secret cases under the Economic Espionage Act, however, victims of this practice cannot rely on criminal enforcement, Grassley noted that state laws and state courts meanwhile remain woefully ill-equipped to address what has become an increasingly international issue, as foreign companies steal trade secrets from abroad.

"In many cases, the existing patchwork of state laws governing trade-secret theft presents difficult procedural hurdles for victims who must seek immediate relief," Grassley said.

"The bill would provide clear rules and predictability for trade secret cases. Victims will be able to move quickly to federal court, with certainty of the rules, standards, and practices to stop trade secrets from being disseminated and losing their value," he added.

Among those supporting the bill are big, trade-secret owners like DuPont and Microsoft that could benefit from the bill's protections against foreign cybercrime.

Julie Sigall, who works for Microsoft as its assistant general counsel of intellectual-property policy and strategy, penned a blog post in December in support of the bill, describing the value of trade secrets in the company's innovation.

Not without controversy, the bill has earned criticism for an ex parte civil-seizure provision that aims to prevent thieves from exploiting any information they stole, essentially negating harm before it happens.

The provision would let the U.S. government pre-emptively seize the property of suspected offenders - without notice - if a company believes its secrets have been stolen.

Several law professors flagged this component in an Aug. 3, 2015, open letter to the bills' sponsors, contending that the bill is "fraught with potential anti-competitive abuse."

Start-ups or smaller companies might not stand a chance under the financial burden of federal civil procedures if larger competitors take them to court, they said.

Another 41 law professors signed on to a letter in opposition to the bill in November.

Sen. Coons and other supporters of the bill say it contains safeguards to prevent abuse and unnecessary lawsuits.

Senators previously critical of the ex parte provision of the bill, including Sen. John Cornyn, R-Texas, said the amended bill would allow for asset seizure only under extraordinary circumstances.

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