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Economic Espionage Act Update: U.S. Senate Passes Theft of Trade Secrets Clarification Act in Response to U.S. v. Aleynikov

 
by John Marsh 29. November 2012 15:30

Readers of this blog will recall that the Trade Secret Litigator was most unhappy with the U.S. Court of Appeals' recent decision in U.S. v. Aleynikov, a decision that in this humble author's view unduly narrowed the categories of trade secrets protected under the Economic Espionage Act (EEA).  In response to criticism over the Aleynikov opinion, on November 27, 2012, the U.S. Senate unanimously approved S. 3642, the Theft of Trade Secrets Clarification Act, authored by Senate Judiciary Chairman Senator Patrick Leahy.  This bill is intended to clarify a provision of the EEA with respect to trade secret theft following the Aleynikov case last February. (A PDF showing the changes to bill and the proposed language can be found below).

In Aleynikov, the Second Circuit vacated the conviction of former Goldman Sachs' programmer, Sergey Aleynikov, under the EEA. A New York jury had convicted Aleynikov in December 2010 of stealing source code for Goldman's high frequency trading (HTF) program.  On appeal, however, the Second Circuit concluded that the trade secrets relating to the source code Goldman's HTF program were not related to a product "produced for . . . interstate or foreign commerce" under §1832(a) of the EEA and therefore not entitled to protection.   My criticisms of this opinion and its reasoning can be found here.

S. 3642 seeks to remedy that statutory construction by broadening the statute's scope to cover trade secrets that are "related to a product or service used in or intended for use in interstate or foreign commerce."  The previous language was limited to trade secrets "related to or included in a product that is produced for or placed in interstate commerce," which the Second Circuit narrowly construed to mean in an actual product that was either in interstate commerce or intended ultimately to be placed in interstate commerce.  Because Goldman's HTF trade secrets were not part of an actual product being sold, the Second Circuit concluded that those trade secrets fell outside the EEA's protections.

The bill is a welcome development to remedy an unduly narrow view of the statute.  This should serve to protect a broader range of trade secrets, including products and now services that are simply intended for use in interstate commerce.  This language should cover significantly more types of trade secrets so long as they have some relationship to a product or service that is intended for some kind of interstate use.
 
Judiciary Committee Ranking Member Senator Charles Grassley and the members and staff of the Senate Judiciary Committee were also instrumental in passing this bill.  A shout out goes out to Senator Leahy, Senator Grassley and the other members of the Senate for moving promptly to try to remedy this construction and let's hope the U.S. House of Representatives moves promptly as well. Now, let's get some momentum behind Senator Kohl and Senator Coons' bill to amend the EEA to include a civil remedy for trade secret owners.

18 USC Sec 1832 Redline.pdf (13.09 kb)

Tags:

Economic Espionage Act | Legislation | Trade Secrets

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About John Marsh

John Marsh Hahn Law AttorneyI’m a Columbus, Ohio-based attorney with a national legal practice in trade secret, non-compete, and emergency litigation. Thanks for visiting my blog. I invite you to join in the conversations here by leaving a comment or sending me an email at jmarsh@hahnlaw.com.

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The information in this blog is designed to make you aware of issues you might not have previously considered, but it should not be construed as legal advice, nor solely relied upon in making legal decisions. Statements made on this blog are solely those of the author and do not necessarily reflect the views of Hahn Loeser & Parks LLP. This blog material may be considered attorney advertising under certain rules of professional attorney conduct. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon advertisements.

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