WASHINGTON/NEW YORK (Reuters) - The U.S. Senate on Monday approved legislation to give companies greater legal protections for their commercial secrets and allow them for the first time to sue in federal court if they are stolen.
The Defend Trade Secrets Act passed 87-0, amid strong White House backing.
Supporters hope the unanimous vote will boost the bill’s prospects in the House of Representatives.
“Some thieves would rather not go through the trouble of developing products themselves; they’d rather just steal the fruits of others’ creativity,” Senate Majority Leader Mitch McConnell said in urging passage of a bill he argued would “help protect American innovation.”
Theft of intellectual property, including trade secrets, costs U.S. businesses more than $300 billion a year, according to a 2013 report by the Commission on the Theft of American Intellectual Property, which was made up of a bipartisan group of high-ranking former U.S. officials.
For that reason, the bill has received support from a wide array of companies, including Boeing Co (BA.N) and Johnson & Johnson (JNJ.N), and trade groups such as the Biotechnology Industry Organization, the U.S. Chamber of Commerce, and a software lobby whose members include Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O).
Trade secrets are confidential information that can give a business a commercial edge. They can vary widely depending on the industry, including manufacturing processes, formulas, computer algorithms, industrial designs, business strategies, and customer lists. Companies have become increasingly concerned about protecting themselves against threats, including hacking and rogue employees.
The legislation would give companies the right to sue in federal court to recover damages, enforce injunctions and prevent the further dissemination of stolen trade secrets.
It would also create a uniform standard for what constitutes trade secret theft. Currently, if companies want to sue, they are relegated to state courts, where there is a patchwork of state laws.
Trade secret theft is already a federal crime, but according to the bill’s sponsors, the U.S. Department of Justice lacks the resources to prosecute such crimes.
Some critics, including a group of legal scholars, has warned that broad legislation on trade secrets could lead to more frivolous litigation in federal courts.
The House version of the bill has more than 120 sponsors, but the House Judiciary Committee has not yet considered it and it was not clear whether it would act in coming months.
Reporting by Andrew Chung in New York and Richard Cowan in Washington; Editing by Alexia Garamfalvi and Matthew Lewis