Trade Secrets Protection Act Passes House Judiciary Committee

On September 17, 2014, the Judiciary Committee of the U.S. House of Representatives approved the Trade Secrets Protection Act. The bill, sponsored by George Holding (R-NC), is a companion bill to the previously reported Defend Trade Secrets Act of 2014, currently before the Senate Judiciary Committee.

Both bills would create a private right of action for trade secrets theft and include provisions allowing ex parte seizure orders to preserve evidence. There is concern that these seizure provisions could be used for anti-competitive purposes. Specifically, there is fear that start-up companies would be subject to abusive litigation by larger competitors.

Supporters of the bill contend that the seizure provisions will be used for extreme situations and there are protections in place to prevent abuse. The seizure provisions include the same high threshold as other ex parte seizures by federal courts. For example, the bill requires that the movant show “an immediate and irreparable injury” and that the party is “likely to succeed in showing that the person against whom seizure would be ordered misappropriated the trade secret and is in possession of the trade secret.” Parties subject to an unlawful seizure are entitled to attorney’s fees and damages.

Both bills have bipartisan co-sponsors and continue to gain support from several major companies, including Microsoft Corp., General Electric Co. and DuPont Co.