United States: Senate Judiciary Committee Issues Report In Support Of Defend Trade Secrets Act

The Senate Judiciary Committee recently released Senate Report 114-220 regarding the Defend Trade Secrets Act of 2016 ("DTSA"). A background on and recent developments of the DTSA are discussed more fully on our blog.

The Judiciary's most recent report, authored by Senator Chuck Grassley (R-IA), recommended that the recently amended version of S. 1890 pass.

The Report was separated into seven subparts, which discussed the (1) background and purpose of the DTSA; (2) the history of the bill and committee consideration; (3) a section-by-section summary of the bill; (4) a congressional budget office cost estimate; (5) a regulatory impact evaluation; (6) concluding remarks; and (7) changes to existing law that the bill would effect.  The most noteworthy sections are discussed below.

Background and Purpose of the DTSA

The Report began by noting the importance of the legal protection of trade secrets, as well as the "economically damaging" effect on their theft. The Report illustrated this damage by comparing the economic loss to the American economy caused by trade secret theft ($300 billion) to the total annual level of U.S. exports to Asia, and by noting that 2.1 million U.S. jobs are lost each year due to such theft. Trade secret theft, the Report acknowledged, is becoming harder to pinpoint as technological advances promulgate. In this regard, the Report recognized the lack of civil remedy at the federal level for trade secret theft, and described how the DTSA would amend the Economic Espionage Act of 1996 ("EEA") to provide for not only a federal criminal remedy, but also for a federal civil remedy for trade secret misappropriation. The DTSA would provide victims of trade secret theft equitable remedies as well as damages awards. Equitable remedies under the DTSA include expedited relief in the form of an ex parte seizure, but only in extreme circumstances so as to prevent further dissemination of trade secret information and/or for the preservation of evidence.

The ex parte seizure provision has met some adversity.  However, the Report sought to mitigate any opposition by recalling that the DTSA balances the seizure provision with the rights of defendants and third parties by: (1) minimizing interruption to business operations of third parties; (2) protecting seized property from disclosure; and (3) setting a hearing date as soon as practicable.

History of the Bill and Committee Consideration

The Report next delineated the history of the DTSA, which includes past bills S. 3389, the Protecting American Trade Secrets and Innovation Act of 2012 (introduced by Senators Kohl, Coons, and Whitehouse), and S. 2267, the Defend Trade Secrets Act of 2014 (introduced by Senators Coons and Hatch).  Next, the Report referenced the Committee hearing that occurred on December 2, 2015 (about which we blogged and held a Live Tweet), which featured intellectual property counsel from E.I. DuPont de Nemours and Company and Corning, Incorporated, as well as an expert on trade secret law, and a professor specializing in trade secret academia.  Previous to the December hearing, the Senate Judiciary Committee's Subcommittee on Crime and Terrorism held a hearing in May 2014, entitled ''Economic Espionage and Trade Secret Theft: Are Our Laws Adequate for Today's Threats?," which featured testimony from an FBI representative, the Vice President of Intellectual Property Management at the Boeing Company, the President and CEO for the Center for Responsible Enterprise and Trade, the President of Marlin Steel Wire Products, and the Vice President and General Patent Counsel for Eli Lilly and Company.

More recently, in January 2016, Senators Hatch and Coons presented two "groups" of amendments to the DTSA (blogged here), taking into consideration suggestions from other members of the Judiciary Committee.  As such, it unanimously adopted both groups of amendments.

The first group of amendments: (1) made it so only a trade secret owner could bring a civil action for misappropriation; (2) changed the statute of limitations from five years to three years; (3) re-defined "trade secret" and "improper means;" (4) clarified that ex parte seizures may only be instituted in "extraordinary circumstances" and placed further limitations on the seizures; (5) clarified the appropriate scope of injunctions relating to employment to ensure that court orders are not contrary to applicable state laws; and (6) added language expressing Congress' notion of the importance of balancing the interests of all parties when issuing an ex parte seizure, and "instructing the Federal Judicial Center to develop best practices for the execution of seizures and the storage of seized information."

The second group of amendments sought to provide protection to "whistleblowers who disclose trade secrets to law enforcement in confidence for the purpose of reporting or investigating a suspected violation of law," and the "confidential disclosure of a trade secret in a lawsuit, including an anti-retaliation proceeding."

Section-by-Section Summary of the Bill

Much of the substance of the section-by-section summary portion of the Report appears above.  That said, below appears a list of additional points of interest presented by section of the bill:

  • Section 2 of the bill describes federal jurisdiction for theft of trade secrets. Importantly, it describes the ex parte seizure orders and their scope.  A portion of the summary is reproduced and discussed below:

    • Ex parte seizures will only issue upon a showing that the prerequisites for the issuance of such are present. In other words, a seizure will only issue if an injunction under the rules of civil procedure would be adequate, such as when there is evidence that a defendant is a flight risk or will immediately share the trade secret with third parties.  The Report lists further requirements a party must show in order for a seizure order to issue:

(1) a temporary restraining order issued pursuant to Federal Rule of Civil Procedure 65(b) would be inadequate because the party to which the order would be issued would evade, avoid, or otherwise not comply with it;

(2) immediate and irreparable injury will occur if the seizure is not ordered;

(3) the harm to the applicant of denying the application outweighs the harm to the legitimate interests of the person against whom the seizure is ordered and substantially outweighs the harm to any third parties;

(4) the applicant is likely to succeed in showing that the person against whom the seizure is ordered misappropriated the trade secret by improper means, or conspired to misappropriate the trade secret by improper means, and is in actual possession of it and any property to be seized;

(5) the applicant describes with reasonable particularity the matter to be seized and, to the extent reasonable, identifies the location where the matter is to be seized;

(6) the person against whom the seizure would be ordered, or those working in concert with that person, would destroy, move, hide, or otherwise make such matter inaccessible if the applicant were to provide that person notice; and

(7) the applicant has not publicized the requested seizure.

The Report hypothesized that courts would require a party seeking a seizure order to describe the trade secret at issue with "sufficient particularity," especially in light of the "actual possession" requirement, which aids in protecting third parties from succumbing to the seizure order (like Internet service providers).

  • Remedies

    • Equitable remedies are provided for in the bill, but if found appropriate, the bill allows a court to require "affirmative actions to be taken to protect the trade secret" and may "condition future use of the trade secret upon payment of a reasonable royalty" for a determined amount of time.
    • Additional state law remedies are available under the Uniform Trade Secrets Act ("UTSA") of a particular jurisdiction as well as under the DTSA. As such, the DTSA does not preempt state law with regard to remedies, and, with particular regard to equitable remedies, is "intended to coexist with... applicable State law governing when an injunction should issue in a trade secret misappropriation matter."
    • Exemplary damages and attorney's fees are available as well.
  • Definitions; Rule of construction; Conforming amendments

    • "Misappropriation" is defined as it is under Section 1(2) of the UTSA; and
    • "Improper Means" is defined as it is under Section 1(1) of the UTSA
  • Section 3 of the bill discusses the enforcement of trade secret theft. It sets a maximum penalty for violation of the bill to be "the greater of $5,000,00 or three times the value of the stolen trade secret" to the owner of the trade secret.  Such amount includes "expenses for research and design and other costs."  Section 3 also amends 18 U.S.C.§ 1961(1) to include portions of the DTSA as "predicate offenses for the Racketeer Influenced and Corrupt Organizations (RICO) Act.
  • Section 4 of the bill discusses report on theft of trade secrets occurring abroad and requires the filing of a report by the U.S. Attorney General on several issues, including the "scope and breadth of trade secret theft from United States companies occurring outside the United States" (emphasis added).

It remains to be seen whether the Senate's Report will have any effect on the House's bill, H.R. 3326, which currently has 126 co-sponsors, but does not contain some of the changes made to the Senate bill by the Judiciary Committee.  Stay tuned for further updates and please join us for our complimentary webinar on the Defend Trade Secrets Act and European Directive to harmonize EU trade secret laws on March 29th.

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.

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.