Home Compliance United States: US President signs bill targeting theft of US trade secrets into law

United States: US President signs bill targeting theft of US trade secrets into law

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On January 5, 2023, President Biden signed the U.S. Intellectual Property Law Protection to law. The law seeks to deter theft of U.S. intellectual property by non-U.S. parties by threatening economic sanctions on those involved in the theft of trade secrets. This Act supersedes existing actions available under U.S. law, such as criminal prosecution, civil action, and/or designation on U.S. Restricted Persons Lists such as the Entity List (administered by the U.S. Department of Commerce, Bureau of Industry and Security) is added to.

Specifically, the law requires the President to submit a report to Congress within six months of enactment, and annually thereafter to identify:

  1. Any foreign person or entity knowingly involved in, and benefiting from, the material theft of a U.S. trade secret, if the theft (a) occurred at or after the enactment of law; to a material threat to the national security, foreign policy, economic health, or financial stability of the United States if it is reasonably likely to have adverse consequences or may contribute materially;
  2. Any foreign person or entity that has provided significant financial, material, or technical assistance, or goods or services to assist in such theft or to derive a significant benefit from such theft.
  3. Any foreign entity owned or controlled by, directly or indirectly, acting for or on behalf of the person identified under (i) or (ii);When
  4. CEOs and directors of foreign corporations identified in (i) or (ii).

Once the report is compiled, the law requires the president to:

  • Impose five or more sanctions from a comprehensive list on entities identified in the report. This includes, among other things, property block sanctions (i.e., designation as a Specially Designated National); listing on the Entity List; prohibition on loans from U.S. financial institutions; U.S. Government Procurement Prohibition; Investment Prohibition in Certain Entities.
  • Impose asset interdiction sanctions and bar entry to the United States against individuals identified in the report.

Under law, sanctions may be waived if the President determines that waivers are in the national interest of the United States and the President notifies Congress within 15 days of issuing the waivers. The legal requirement is currently set to end after 7 years.

The law provides another important enforcement tool for trade secret owners who experience theft by foreign parties or theft that occurs abroad. Securing remedies for trade secret theft in such circumstances requires a number of measures, including barriers to claiming jurisdiction, restrictions on disclosure required to prove theft, and enforcement of awards against foreign defendants. There are hurdles (even if the IP owner wins the first hurdle and the court). In imposing sanctions, the U.S. government has responded to the challenges facing the private sector, which often faces difficulties in proving trade secret theft, especially when discovery of conduct occurring outside the United States is required. You don’t have to grapple with the same difficult evidence problem. The availability of economic sanctions is therefore a meaningful legislative change that could become a frequently used mechanism.

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