United States: Winter 2014 Federal Copyright And Trade Secret Legislation Update

Last Updated: February 20 2014
Article by Armand J. Zottola and Robert F. Parr

Several bills under consideration in the 113th Congress would establish or significantly amend certain federal statutes related to the protection, enforcement, and exploitation of trade secrets or copyrights. Some legislation aims to establish a private right of action for trade secret theft under federal law or to prevent or deter trade secret theft through cyberattacks. Other bills are designed to repeal or leverage certain compulsory copyright license fees or to modify copyright laws relating to public performance rights and anticircumvention of technological access controls on consumer devices. If signed into law, these bills would have important implications on a wide range of interested parties, including performing artists, entertainment industry or content right stakeholders, and any business intent on exerting greater control over its trade secrets. Set forth below is a current summary of some of the more significant bills.

Trade Secrets

Recent developments in U.S. federal trade secret law spring from the Economic Espionage Act of 1996 (EEA). While the EEA currently only provides for criminal prosecution, the Future of American Innovation and Research Act (S. 1770) (FAIR Act) would allow trade secret owners to bring civil actions for trade secret misappropriation against foreign defendants (or defendants located in the U.S. when the theft was intended to benefit a foreign person or entity). Designed primarily to target trade secret theft by or in favor of foreign actors or entities, under the FAIR Act, plaintiffs may seek damages, restitution, injunctive relief, punitive damages, and attorney's fees, and courts may seize items used to facilitate trade secret theft (i.e., cell phones or computers). A similar version of the foregoing bill, the Private Right of Action Against Theft of Trade Secrets Act of 2013 (H.R. 2466) creates a private cause of action for trade secret theft against defendants located in the U.S. and further clarifies that claims for reverse engineering trade secrets are not actionable. The private right of action under these bills would presumably help companies that face trade secret theft involving international participants by facilitating multi-jurisdictional litigation involving witnesses and critical evidence located in another state or country. Under either bill, a private right of action would also allow companies to assert greater intellectual property rights over proprietary data, such as consumer data that has become a more important intangible asset to many businesses.

Several other pending bills addressing trade secret protection were introduced to prevent and deter trade secret theft resulting from cyber invasions or cyberattacks. These bills are largely reactionary to the recent wave of cyber intrusions, as best illustrated by a 2013 report that the Chinese military had hacked into the computers of many U.S. businesses in order to steal trade secrets. With respect to these bills, the Cyber Economic Espionage Accountability Act (H.R. 2281) (CEEAA) would permit the President of the U.S. to identify and penalize foreign officials that commit or aid cyberspying and trade secret theft through asset freezes, travel bans, visa revocations, and other punitive measures. Introduced only a month after the CEEAA in May of 2013, the Deter Cyber Theft Act (S. 884) would further require a watch list of offending nations to be created, and also mandate the President to direct U.S. Customs and Border Protection to bar imports from foreign countries named to a watch list.

Finally, several other trade secret protection bills look to strengthen trade secret protection under federal law by allowing the sharing of cyber threat information and by increasing or enhancing penalties for cyber criminals. For example, the Strengthening and Enhancing Cybersecurity by Using Research, Education, Information and Technology Act (H.R. 1468) creates a limited exemption from antitrust laws for the sharing of cyber threat information between private businesses, and aims to amend certain provisions of the Computer Fraud and Abuse Act to include criminal penalties for aggravated damage to certain critical infrastructure computers (e.g., those that control chemicals or electricity). Along similar lines, the Cyber Intelligence Sharing and Protection Act (H.R. 624) (CISPA) is designed to permit information sharing about cybersecurity threats among government agencies and private companies. CISPA would allow the federal government to use cyber threat information obtained from private companies for certain purposes including, without limitation, to investigate and prosecute cybersecurity crimes. In light of recent scrutiny over government initiatives to obtain and review data from companies, it is worth noting that CISPA has already drawn substantial criticism from privacy advocates and the White House and could have difficulty advancing.

Copyrights

Various bills under consideration in the copyright arena could lead to important changes in copyright law. Introduced in late 2013, the Free Market Royalty Act (H.R. 3219) (FMRA) would amend the U.S. Copyright Act (Copyright Act) to include a public performance right for any audio transmission of a sound recording. FMRA would then provide performing artists a right to collect royalties when their songs are broadcast over the radio or through comparable online services (i.e., Pandora or Sirius XM). In addition, the FMRA would eliminate compulsory license rates for digital audio transmissions. Instead, copyright owners would be able to negotiate directly the terms of licenses to air their recordings, or opt to have such rates negotiated on their behalf by SoftExchange, Inc., a non-profit performing rights organization that collects royalties on behalf of sound recording copyright owners.

The Department of Commerce (DOC) is likewise exploring ways to update the Copyright Act and, in particular, to address the complexities associated with protecting copyrights on the Internet. The DOC recently received public comments on a green paper about copyright policy from major industry groups and other stakeholders on four hot-button issues: (i) statutory damages imposed on people caught illegally sharing content over the Internet; (ii) the sufficiency of the notice and take-down system set forth under the DMCA; (iii) whether the first-sale doctrine (i.e., the right to resell without liability for copyright infringement) should be extended to digital products (i.e., e-books and MP3 music files); and (iv) the uncertain legal status for musical remixes or "mashups." This process is designed to help the DOC develop policy recommendations on the foregoing issues which may include support for new legislation by Congress.

Other bills focus on changing the compulsory license fees required by the Copyright Act related to content distribution in the television and broadcasting industries. The Next Generation Television Marketplace Act (H.R. 3720) was introduced to repeal compulsory copyright license fees for certain transmissions of television programming by satellite carriers and also eliminates certain categories of remedies. Moreover, in an effort to give consumers more control over their satellite or cable services, the Television Consumer Freedom Act of 2013 (S. 912) aims to incentivize major television distributors covered by the statute (i.e., Walt Disney Co., News Corp., and CBS) to let consumers purchase channels on an individual or "a la carte" basis. To this end, distributors that only offer channels in bundles or packages will not be permitted to pay the compulsory copyright license fee to distribute content. Instead, such distributors would have to negotiate with individual rights holders to distribute their content.

Another piece of legislation that has generated significant buzz relates to amending the Digital Millennium Copyright Act (DMCA). In 1998, Congress enacted the DMCA to address dramatic changes in the copyright landscape. Section 1201 of the DMCA prohibited consumers from bypassing or "unlocking" technical access controls on software or hardware devices to protect the underlying work from copyright infringement. The foregoing prohibition, however, is not absolute. The DMCA allows the Library of Congress (LOC) to exempt particular copyrighted works from the anticircumvention provisions of the DMCA for three-year periods.

In 2006, and again in 2010, the LOC exempted wireless mobile devices from the anticircumvention prohibition to let consumers reprogram their mobile devices in order to change wireless service providers. As a result, from 2006 to January of 2013, consumers could unlock their mobile devices without liability for copyright infringement. Nevertheless, in January of 2013 the LOC allowed the exemption to expire and therefore made cell phone unlocking illegal once again under Section 1201 of the DMCA.

Amid public outcry and political pressure, three bills were introduced in Congress by mid-2013 that narrowly focused on legalizing cell phone unlocking through different means. Of these, the Unlocking Technology Act of 2013 (H.R. 1892) (UTA) would amend Section 1201 of the DMCA and make it legal for consumers to unlock technical access controls on personally owned software or hardware devices as long as they do not commit copyright infringement once they have access to the underlying work. While "bootlegging" music and movies would remain illegal under the UTA, the bill would allow consumers to unlock cell phones, computers and other personal devices for purposes of repair, maintenance, and modification. UTA would further protect researchers, engineers, and companies that create, transmit, and otherwise make available the tools that facilitate the unlocking process.

The foregoing pending legislation may lead to significant changes in U.S. federal laws related to the protection, enforcement and exploitation of trade secrets and copyrights. Consequently, interested parties should monitor these bills to ensure they are fully aware of any developments that may affect their rights and obligations under U.S. federal law. This raft of current bills, however, could mark only the beginning of efforts to modify and expand U.S. federal trade secret and copyright laws. Stay tuned for further updates from Venable's Intellectual Property team on important developments in this area.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Strasburger & Price, L.L.P.
Mintz
Akin Gump Strauss Hauer & Feld LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Strasburger & Price, L.L.P.
Mintz
Akin Gump Strauss Hauer & Feld LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions