Obama Signs Expansion of Trade Secret Law

Theft of trade secrets is a persistent issue in the executive suite, and the universe of possible violations recently expanded thanks to legislation signed into law by President Obama.

According to a report in Security Management, The Theft of Trade Secrets Clarification Act of 2012 amends the Economic Espionage Act of 1996 “to apply the prohibition against the theft of trade secrets intended to be used in interstate commerce even if those products or services are not directly used in commerce.”

The new law prohibits the theft of a trade secret that is ‘related to a product or service used in or intended for use in interstate or foreign commerce.’ Prior to this new law, a trade secret was more narrowly defined as ‘related to or included in a product that is produced for or placed in interstate or foreign commerce.’

The legislation was prompted by a decision handed down by the U.S. Court of Appeals for the Second Circuit in 2011. In the case, U.S. v. Aleynikov, the court ruled that the theft of proprietary source code by an employee was not trade secret theft because it was not directly used in interstate commerce, though the company did use it internally to create an advantage in the marketplace.

Clearly, trade secrets, as a potential landmine for companies and executives, aren’t going away. Companies must ensure they’re doing everything they can do protect their trade secrets and executives must remain vigilant that they don’t unknowingly put themselves in danger of trade secret-related litigation (particularly should they decide to change employers). When in doubt, consult an executive employment lawyer with ample experience in trade secret issues.


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