Senate expected to pass trade secrets bill

WASHINGTON/NEW YORK The U.S. Senate is poised to pass a bill on Monday that would give companies greater legal protections for their commercial secrets and would allow them for the first time to sue in federal court if they are stolen.

The Defend Trade Secrets Act has significant bipartisan support with 65 cosponsors, led by Senator Orrin Hatch, Republican of Utah, and Delaware Democratic Senator Chris Coons.

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.

Although some congressional lawmakers think that system is adequate and federal legislation is unnecessary, Hatch and Coons called it “woefully insufficient,” in an opinion piece they published in Politico on Monday.

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.

A version of the bill has been introduced in the U.S. House of Representatives and 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.

(Editing by Alexia Garamfalvi and Matthew Lewis)

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