Defend Trade Secrets Bill

Floor Speech

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Mr. COONS. Mr. President, I begin my remarks by thanking my colleague, good friend, and the leader in this effort to pass the Defend Trade Secrets Act in the Senate today, the President pro tem of the Senate, Senator Orrin Hatch. In his four decades of service in this body, Senator Hatch has become well known for his ability and willingness to work across the aisle, to be a genuine leader in intellectual property matters, and to fight tirelessly for America's inventors and inventions. I am grateful for the small role I have been able to play in partnering with Senator Hatch to bring this important piece of legislation through the Judiciary Committee and to the floor today.

Our country has long been the unquestioned world leader in the creation and production of innovative ideas. Simply put, for over two centuries we understood the critical connection between preserving intellectual property rights and creating sustained economic growth. As a result, we are second to none when it comes to innovation. Yet a critical form of IP, intellectual property, has somehow slipped through the cracks of Federal protection. Of course, I am talking about trade secrets, such as the secret formula for Coca-Cola, Kentucky Fried Chicken, customer lists, pricing strategies, and key stages in a vital manufacturing process. They are the lifeblood of great companies that can lead to the creation of products that make a company unique and uniquely profitable. It should come as no surprise that they are a major contributor to our economy. By some estimates, trade secrets are worth $5 trillion to publicly listed American companies alone.

Despite the importance of trade secrets to our economy and our innovation ecosystem, trade secrets remain the only form of intellectual property not protected from theft under Federal civil law. More specifically, a misuse of trade secrets doesn't provide the owner with a Federal private right of action to seek redress. This means companies today have to rely on State courts or on Federal prosecutors to protect their rights. The multi-State procedural and jurisdictional issues and the hurdles you have to clear that arise in such cases are oftentimes intensive, costly, and complicated.

Meanwhile, the Department of Justice, currently empowered to protect trade secrets on the Federal level, lacks the resources to prosecute many of the cases that arise. By the time the existing protections catch up with bad actors who have taken off with a customer list, formula, or recipe, it is often too late. Unlike physical goods, you simply can't take back trade secrets once they have been shared with the public. Once a trade secret is no longer secret, it loses its legal protection.

This glaring oversight in our Federal legal system has become increasingly problematic in recent years as technology has made it easier and easier to steal trade secrets. Today a foreign competitor can steal a vital trade secret from an American manufacturer with just a few key strokes through a cyber attack. This hasn't gone unnoticed. The rate of cyber trade secret theft is at an alltime high, and our foreign competitors are stealing American innovation with woefully inadequate repercussions. This uptick and steady rise in trade secret theft is affecting American businesses large and small across our country. Today the misappropriation of trade secrets is estimated to cost American companies between $160 and $480 billion annually. That money would be so much better spent by investing in new products, growing businesses, and creating jobs.

For example, my home State of Delaware has felt the impact of trade secret theft. Many are familiar with DuPont's signature product Kevlar, an extraordinarily strong and lightweight synthetic fiber that is best known for its use in lifesaving body armor. It is worn by dedicated police officers and the brave men and women in our Armed Forces. It has literally saved thousands of lives, including more than 3,000 law enforcement officers across this country.

About 10 years ago, DuPont developed a next generation of Kevlar, which was even lighter and better able to withstand penetrating trauma from a wide range of rifle rounds or IED-generated shrapnel. This technology represented a real breakthrough in safety, but it cost millions upon millions to develop. You see, chemically the spun polyaromatic fibers that make up Kevlar are not that complicated, but the fabrication and production method that give the fiber strength and flexibility is incredibly difficult to develop and then execute.

One day about 6 years ago--just 4 years after DuPont had developed this next-generation protective technology--a rogue employee took the trade secrets and the know-how behind manufacturing this new product and went and gave it to a rival manufacturing company in Korea by using DuPont's trade secrets. The potential loss to DuPont from this one instance of trade secret theft cost roughly $1 billion.

Not only does trade secret theft cost American businesses revenue, which puts American jobs at risk, but it also discourages businesses from investing in critical research and development, and of all the sectors in the American economy, trade secrets are most central for manufacturing and for manufacturing in advanced materials. If you know an employee can steal your company's trade secret, potentially resulting in a loss of up to $1 billion, that trade secret that was the product of years of research and development, as was the case for DuPont with their next-generation Kevlar, it becomes harder and harder to justify investing substantial sums in the R&D needed to continue to produce technological breakthroughs and cutting-edge manufacturing in the United States.

This trade secret theft can have a devastating, long-term impact on our country's ability to innovate and compete. It is also of particular concern in my home State of Delaware, where R&D is critical to our economy and sustaining our manufacturing sector. These protections in today's Defend Trade Secrets Act will only grow in importance as our country continues to cultivate advanced manufacturing.

Delaware has a proud legacy of encouraging cutting-edge science. We are home to hundreds of basement inventors who have tinkered, designed, and perfected inventions. Some have become well known internationally, such as Kevlar, and others are not as well known but are critical to our economy. That is why I introduced, along with my friend and senior colleague Senator Hatch, the Defend Trade Secrets Act. This bill creates a new Federal private right of action for the misappropriation of trade secrets. It uses an existing Federal criminal law, the Economic Espionage Act, to define trade secrets, and it draws heavily from the existing Uniform Trade Secrets Act which has been enacted by many States to define misappropriation.

Simply put, our bill will harmonize U.S. law. Each State has a slightly different trade secret law, and they vary in many different ways. Not all of these differences are major, but they affect the definition of what a trade secret is or what an owner must do to keep a secret or what constitutes misappropriation or what damages and remedies are available.

Our Defend Trade Secrets Act creates a single national baseline, or a minimal level of protection, and gives trade secret owners access to both a uniform national law and to the reach of Federal courts, which provide nationwide service of process and execution of judgments. However, it is important to know this bill does not preempt State law because States are, of course, free to continue to add further protections.

In my view, this bill is a commonsense solution to a very serious problem. Senator Hatch and I first introduced this bill in April of 2014, and we reintroduced it last July with just four original cosponsors. The bill before us today now has 65 bipartisan cosponsors in the Senate. An identical version in the House, introduced by Doug Collins of Georgia and Jerry Nadler of New York, now has 128 cosponsors. Congressmen Collins and Nadler have been great partners in this effort. Congressman John Conyers has also provided invaluable support.

In addition to the broad bipartisan support we have collected on this bill from our colleagues, we have gained endorsements from dozens and dozens of companies as diverse as Boeing, Corning, Microsoft, and DuPont. I believe it is also a testament to the hard work and esteem in which Senator Hatch is held by his colleagues. Senator Hatch has long been a leader in intellectual property and has been able to lead a successful, open, and collaborative process that has allowed us to move the bill to this point today.

Many of our colleagues, Republicans and Democrats, had suggestions for ways to improve the original draft. I am proud many of the Senators who originally raised concerns or questions have now become cosponsors of the bill as a result of Senator Hatch's leadership and our collaboration.

In today's political climate, it is easy to forget that to get things done, we don't have to agree on everything, we just have to agree on one thing. In this case, we have all agreed that losing hundreds of billions of dollars annually to trade secret theft and misappropriation has been hurting American businesses and our economy.

This bill is truly bipartisan. Frankly, it has united industry, practitioners, and Members of this body in a way we don't see often enough today. I rarely have an opportunity to work closely with the Heritage Foundation, the National Association of Manufacturers, and intellectual property owners on the same bill, but good policy can make for unique partnerships. With the bill before us today, the good policy is a commonsense proposal that creates a clear national standard and facilitates businesses' protection of their trade secrets in Federal court.

I thank all of my colleagues who have cosponsored and supported this bill. It has been a pleasure to work with them as we worked to ensure that this final bill is bipartisan and achieves our goal of protecting American trade secrets.

The formula for how we, together, got to this point is simple. Senator Hatch and I saw a problem, we found a coalition that wanted to fix it, and we came together to find a solution.

I thank former Senator Kohl, with whom I first discussed this issue when I came to the Senate. I thank him for his early interest and involvement in trade secret protections. Of course, I am particularly grateful to Senator Hatch for his championship of this bill and leadership in finding consensus. I wish to join him in thanking Chairman Grassley and Ranking Member Leahy for their critical support and commend my colleagues for their focus on this issue. I wish to specifically thank Senators Whitehouse, Feinstein, Graham, and Flake for their contributions to this bill that has strengthened it.

I would be remiss if I didn't recognize and thank the tremendous efforts our staff contributed together to get this bill to where it is today. Senator Hatch has thanked many of the floor staff, leadership staff, and staff in the House, and I would like to add to my thanks to Matt Sandgren in Senator Hatch's office and to my tireless, dedicated, and recently departed from my office chief counsel, Ted Schroeder, as well as Jonathan Stahler, Andrew Crawford, and Erica Songer on my staff.

This major achievement is the product of many contributions, and that is how the Senate is supposed to work. Given the wide support this bill enjoys today in the Senate and the fact that there is already an identical House version with bipartisan support, I am hopeful the House will act and pass this bill without delay.

I was pleased to learn earlier today that the administration has issued a Statement of Administration Policy urging the passage of this bill and its rapid enactment into law. The sooner this bill becomes law, the sooner American businesses and companies can get back to creating jobs and producing new, life-changing products and services. Our country's legacy of innovation depends on it.

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