Defend Trade Secrets Bill

Floor Speech

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Ms. KLOBUCHAR. Mr. President, I rise today to speak in support of the Defend Trade Secrets Act, which is before us today. I thank Senators Hatch and Coons for their important work on this bill and Chairman Grassley and Ranking Member Leahy for their leadership as well.

Stolen trade secrets cost American companies--and thus their workers--billions of dollars each year and threaten their ability to innovate and compete globally. This bill will help protect vital intellectual property, and I am pleased to be a cosponsor.

Trade secrets are the lifeblood of so many businesses in American. Stealing those ideas can wipe out years of research by employees and development and cost millions of dollars in losses because competitors--those that steal the secrets--reap the benefits of innovation without putting in any of the work. Although measuring the total cost of trade secret theft is difficult, one study using multiple approaches estimates the yearly cost at 1 to 3 percent of the U.S. gross domestic product.

Today, as much as 80 percent of companies' assets are intangible, the majority of them in the form of trade secrets. This includes everything from financial, business, scientific, technical, economic, and engineering information to formulas, designs, prototypes, processes, procedures, and computer code. Trade secret theft poses a particular risk for my home State of Minnesota, which has a strong tradition of innovation and bringing technological advances to the marketplace. Our companies have brought the world everything from the pacemaker to the Post-it Notes. Protecting their intellectual property is critical to their economic success, critical to our businesses, and, most importantly, critical to the workers and employees who make their living in American businesses.

Here are some examples of what we are talking about and the costs when trade secret thefts occur.

In 2011 a former employee of the Minnesota agricultural company Cargill stole trade secrets of Cargill and Dow Chemical regarding a product and gave them to a Chinese university. The two companies suffered combined losses of over $7 million. Fortunately, the former employee was caught, convicted, and received 87 months in prison--the strongest sentence possible. But look at the loss that occurred--$7 million.

That same year, an employee of a Minnesota paint company, Valspar, tried to steal $20 million worth of chemical formulas to give to a Chinese company in exchange for a high-ranking job. That really happened. The authorities caught him before he completed his theft, and he received a sentence of 15 months in jail.

But too many thefts go unprosecuted, and the costs go beyond simply dollars and cents. Medical device makers Medtronic and Boston Scientific hope to bring advanced care to patients in China. These companies would like to do even more but fear they won't be able to protect sensitive proprietary technology, and that holds them back. Stronger protection of trade secrets will benefit consumers across the world as well as trade secret owners.

In 1996 Congress enacted the Economic Espionage Act, which made economic espionage and trade secret theft a Federal crime. Nearly 20 years later, the threat of trade secret theft has grown. Thumb drives and the cloud have replaced file cabinets for storage information, making stealing a trade secret as easy as clicking a button or touching a screen. Trade secret theft threatens not just businesses but jobs and, certainly, innovation.

Protecting the intellectual property of American businesses needs 21st century solutions. The Defend Trade Secrets Act demonstrates our commitment at the Federal level to protect all forms of a business's intellectual property. This balanced bill gives companies two more tools to effectively protect their trade secrets.

First, a party can seek an ex parte court order to seize stolen trade secrets to prevent their destruction or dissemination. To prevent abuse, the requirements to obtain an order are rigorous, access to the seized material is limited, and it is only available in what are considered ``extraordinary circumstances.''

Second, the bill creates a Federal private right of action for trade secret theft. Companies will be able to rely on a national standard to efficiently protect their intellectual property.

Securing the trade secrets of American businesses and their employees is a serious issue and needs to be addressed, and I urge my colleagues to support the Defend Trade Secrets Act.

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