Ex parte civil seizure is overkill in trade secret lawsuits

Congress is so polarized right now that it’s tempting to applaud anything that has bipartisan support. After all, if all those people who can’t stand each other can unite over something, it should be safe to assume that whatever brought them together has to be worth supporting, right?

In the case of the Defend Trade Secrets Act, I may have to be the skunk in the garden party. Of course, the intent of the act is a sound one: providing a federal civil cause trade secret theftof action for the theft of trade secrets and creating a uniform standard nationwide for protecting and enforcing those secrets. But one of the remedies – ex parte seizure of allegedly stolen assets – gives me pause.

One reason there’s so much support for this legislation is that, in the public’s mind, the main culprits behind theft of American trade secrets are shadowy underworld hackers lurking in Russia, North Korea and China. But much as we want to blame Boris and Natasha for stealing all our innovation, the reality is that most trade secret theft cases are brought against American citizens who are or were employees of the company being stolen from.

Imagine being an executive who has recently gone from Company A to Company B. Company A alleges in a civil suit that you have stolen trade secrets. Company A’s lawyers convince a judge to order the FBI to seize your personal laptop because, like virtually every white collar worker in America, you frequently do work on your personal computer. If there’s evidence of your chicanery, it’s likely to be on your personal computer, along with all your personal correspondence, family photos and music library.

Remember, these seizures are granted ex parte, which means neither the executive nor Company B have a chance to be heard by the judge making the decision whether to grant the seizure. The only party represented in the room is Company A, which isn’t exactly a disinterested party in the matter.

The DTSA effectively makes government law enforcement agencies an arm of the private sector – all without the protections provided a criminal defendant.

Granted, the bill’s authors heard those objections and, in late January, amended the bill to add that such seizures should only be granted “in extraordinary circumstances.” However, not only is “extraordinary circumstances” overly vague, but if a case were truly “extraordinary,” wouldn’t it justify criminal prosecution?

The Washington and Lee Law Review Online published an exceptional analysis, Ex Parte Seizures and the Defend Trade Secrets Act, last November, which was before the “extraordinary circumstances” amendment was added. Nevertheless, the analysis, written by Eric Goldman of Santa Clara University School of Law, is a thorough examination of why such seizures are so objectionable.

As in so many political debates, those favoring remedies like ex parte civil seizure point to foreign wrongdoers to pass remedies that will, in reality, be executed mainly against American citizens on American soil.

Protecting trade secrets is vital, important work. But it shouldn’t come at the price of violating the civil liberties of American citizens whose only crime was working after-hours on their personal computer.

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