A recently introduced U.S. Senate bill demonstrates both the United States’ continued focus on foreign government-sponsored trade secret misappropriation and the International Trade Commission’s (“ITC”) potential untapped ability to swiftly protect intellectual property (“IP”) owners against this illegal conduct under Section 337.
This summer, U.S. Senators John Cornyn (R-Tex.), Christopher Coons (D-Del.), and Todd Young (R-Ind.) introduced the “Stopping and Excluding Chinese Rip-offs and Exports with United States Trade Secrets Act of 2021,” also known as the “SECRETS Act of 2021.” If passed, the bill would amend the Tariff Act of 1930 to fortify the ITC’s power to protect IP owners against trade secret misappropriation as well as work to expedite the investigatory and exclusionary processes.
Broadly, the bill inserts a new section into the Tariff Act whereby the ITC may “direct the exclusion from the United States of, on the basis of national security, imports of articles that contain, were produced using, benefit from, or use any trade secret acquired through improper means or misappropriation by a foreign agent or foreign instrumentality.” While the bill’s name indicates that it is targeted towards the Chinese government, it would function to exclude any item incorporating or benefitting from foreign government-sponsored trade secret misappropriation.
In order to facilitate investigations into foreign-sponsored trade secret misappropriation, the bill would create an Interagency Committee on Trade Secrets with at least six voting members from a list of government agencies and chaired by the Attorney General. The Committee may choose to conduct its own investigations into alleged trade secret misappropriation, or it may receive complaints from trade secret owners. The Committee must submit a report to the ITC if it decides to proceed with an ex parte investigation. Then the ITC has 30 days to conduct a preliminary, confidential ex parte review to determine if there is a reasonable indication that the article more likely than not is a covered article. If the ITC finds that the article is more likely than not covered, it has 150 days to conduct an in-depth ex parte investigation, which may include a hearing at the ITC’s discretion. The in-depth investigation includes an optional analysis by the Director of National Intelligence within the first 20 days. The ITC may also consult with heads of federal agencies as appropriate.
In both the preliminary review and in-depth investigation, the ITC may consider both (1) whether the article at issue employs a trade secret acquired through improper means or misappropriation by a foreign agent or instrumentality and (2) the relevant U.S. national security and policy interests, as established by the Committee.
Within 30 days of the ITC’s determination (or after an applicable extension) the ITC will publish its decision in the Federal Register.
This is not the first time Congress has introduced legislation to combat foreign-sponsored trade secret misappropriation, particularly that supported by the Chinese government. For example, we previously reported about Senate bill S. 1245, “The Combating Chinese Purloining (CCP) of Trade Secrets Act.” Additionally, we wrote early this year about the Senate’s passage of a bill designed to punish foreign actors for IP theft. We have also highlighted state attempts at legislation against foreign espionage and misappropriation, such as Florida’s Eliminating Corporate Espionage Act and SB 2010. However, the SECRETS Act focuses on the ITC and its potential to rapidly act to protect IP owners through the expedited review process.
Currently, the SECRETS Act has been referred to the Senate Committee on Finance. In the coming months, it will be crucial to both monitor its progress and continue to watch for any similar congressional legislation.