Play nice, or else: Congress considers Federal Trade Secret Law covering foreign entities and actions

While the national press rages about Congress's efforts to deal with the damage caused by Edward Joseph Snowden's release of the NSA's secrets, it is Congressional actions regarding commercial trade secrets that are catching our attention. One interesting bill making its way through the Senate is the Future of American Innovation and Research Act of 2013 (the "FAIR Act").The FAIR Act provides a federal claim for trade secret misappropriation where the person misappropriating the trade secret is either (a) acting on behalf, or for the benefit, of a foreign entity, or (b) taking actions relating to the misappropriation while located outside the United States.

The FAIR Act would provide additional protections to entities whose trade secrets are misappropriated by foreign entities or actions. The FAIR Act includes very broad definitions of a "trade secret" and what it means to "misappropriate." The FAIR Act also includes a myriad of potential remedies, including injunctive relief and damages such as actual losses, unjust enrichment, reasonable royalty, and punitive and exemplary damages in certain circumstances. And while trade secret actions against foreign entities can ordinarily be brought in federal court, the FAIR Act provides for exclusive federal jurisdiction.

In addition to these typical trade secret provisions similar to those found in the Uniform Trade Secret Act the FAIR Act includes interesting provisions on anti-suit injunctionsand seizure orders. As to anti-suit injunctions, the FAIR Act specifically permits district courts to enter anti-suit injunctions for subsequently filed litigation in other jurisdictions. This could prove to be an important provision. In our experience, courts are often disinclined to grant anti-suit injunctions for reasons such as comity, but the specific statutory hook here may assist in securing an anti-suit injunction when, for example, a foreign entity institutes parallel proceedings in its own jurisdiction.

The elaborate seizure provision may also be helpful to trade secret holders. The FAIR Act provides that a court may, upon an ex parte application meeting the statutory requirements, seize any property used in any manner to aid in the trade secret misappropriation. The court may also enter the seizure order to preserve evidence. If the ex parte seizure order is granted, the court will set a hearing within 10 days to review whether the items seized should remain in the court's custody. This ability to seek a seizure order, particularly when combined with the ability to seek a preliminary injunction, provides trade secret holders with powerful remedies that may be used early in trade secret actions.

The FAIR Act is still working its way through Congress, but as currently constructed, it reflects an aggressive effort to discourage trade secret theft by foreign parties and to provide heavy remedies should such theft occur.