Administration Announces Strategy for Protecting U.S. Trade Secrets

18 March 2013 Dashboard Insights Blog

Theft of trade secrets by persons acting on behalf of foreign governments and corporations is a major problem for U.S. manufacturers, including manufacturers in the automotive industries. Spurred by several high-profile instances of trade secret theft — including the convictions of Yu Xiang Dong for stealing trade secrets from Ford and of Shanshan Du and her husband Yu Qin for stealing trade secrets from General Motors — the Obama administration has released a strategy document detailing the measures it intends to take to help protect U.S. companies from such actions in the future.

The Administration Strategy on Mitigating the Theft of U.S. Trade Secrets, which outlined five general steps the administration plans to take:

  • Increasing diplomatic efforts to prevent and investigate instances of trade secret theft. This includes entering into more cooperative agreements with foreign and international law enforcement, and training foreign officials on trade secret awareness and protection measures.
  • Developing and promoting best practices for U.S. trade secret holders to protect their trade secrets.
  • Stepping up domestic law enforcement and prosecution efforts. Among steps the administration plans to take is to increase information sharing between the U.S. intelligence community and the private sector, including counterintelligence techniques that can be applied in a business environment, in recognition of the fact that foreign governments often play a role in trade secret theft.
  • Improving domestic legislation. This comes on the heels of the passage of The Theft of Trade Secrets Clarification Act of 2012 and The Foreign and Economic Espionage Penalty Enhancement Act of 2012, which broadened and strengthened the reach of federal economic espionage statutes (in part as a reaction to judicial decisions narrowly applying those statutes).
  • Reaching out to the public and other stakeholders. This will include education and outreach efforts by federal agencies to try to raise awareness among businesses, particularly small and mid-size businesses, of the harm that can result from trade secret theft, and steps to prevent such theft.

Ultimately, while the administration’s attention to the issue of trade secret theft may be encouraging to U.S. businesses, and may help dissuade potential thieves, businesses must still have an “ounce of prevention” mentality, and review the measures they are taking on their own to protect their intellectual property. No matter how vigorously a trade secret theft is prosecuted by the government, any recovery from such a prosecution goes to the government, not the trade secret owner — and prosecutorial involvement may actually hinder efforts by the business to protect itself via injunctive or other relief, if the government asks the business to refrain from filing a civil action while prosecutors build their case. Moreover, there is no guarantee that prosecutors will even take a given case, as they have the discretion to pick and choose whether to prosecute.

On the other hand, foreign-owned businesses that operate in the U.S. should be aware of changes in criminal enforcement of trade secret theft, as prosecutors will likely be aggressive in looking for test cases given the administration’s and Congress’s recent attention to the field. This heightens the importance of, for example, carefully considering the implications of hiring a competitor’s former employees. What once might have resulted in a civil case under state trade secret law, seeking monetary and injunctive relief, may now be more likely to turn into a federal criminal action with even more wide-ranging consequences.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Insights

2023 M&A Outlook
05 December 2022
Foley Ignite
COVID-related Form I-9 Remote Verification Flexibilities Extended Through July 31, 2023
05 December 2022
Labor & Employment Law Perspectives
Learnings from Recent Physician Practice Private Equity Transactions
05 December 2022
Health Care Law Today
Get up to Speed: Blockchain for the Auto Industry
05 December 2022
Dashboard Insights
What You Should Know About Payor/Provider Convergence
25-26 January 2023
Los Angeles, CA
ATA EDGE2022 Policy Conference | American Telemedicine Association
7-9 December 2022
Washington, D.C.
CLE Weeks
5-16 December 2022
Milwaukee, WI
Foley Sponsors Ernst & Young Entrepreneur of the Year® Program
1 December 2021 - 30 November 2022
Michigan and Northwest Ohio Region