PUBLIC LAW 114–153—MAY 11, 2016
DEFEND TRADE SECRETS ACT OF 2016
130 STAT. 376 PUBLIC LAW 114–153—MAY 11, 2016
Public Law 114–153
114th Congress
An Act
May 11, 2016 [S. 1890]
Defend Trade
Secrets Act of
2016.
18 USC 1 note.
To amend chapter 90 of title 18, United States Code, to provide Federal jurisdiction for the theft of trade secrets, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Defend Trade Secrets Act of
2016’’.
SEC. 2. FEDERAL JURISDICTION FOR THEFT OF TRADE SECRETS.
(a) IN GENERAL.—Section 1836 of title 18, United States Code, is amended by striking subsection (b) and inserting the following:
‘‘(b) PRIVATE CIVIL ACTIONS.—
‘‘(1) IN GENERAL.—An owner of a trade secret that is mis-
appropriated may bring a civil action under this subsection
if the trade secret is related to a product or service used
in, or intended for use in, interstate or foreign commerce.
‘‘(2) CIVIL SEIZURE.—
‘‘(A) IN GENERAL.—
‘‘(i) APPLICATION.—Based on an affidavit or verified
complaint satisfying the requirements of this para-
graph, the court may, upon ex parte application but
only in extraordinary circumstances, issue an order
providing for the seizure of property necessary to pre-
vent the propagation or dissemination of the trade
secret that is the subject of the action.
‘‘(ii) REQUIREMENTS FOR ISSUING ORDER.—The
court may not grant an application under clause (i)
unless the court finds that it clearly appears from
specific facts that—
‘‘(I) an order issued pursuant to Rule 65 of
the Federal Rules of Civil Procedure or another
form of equitable relief would be inadequate to
achieve the purpose of this paragraph because the
party to which the order would be issued would
evade, avoid, or otherwise not comply with such
an order;
‘‘(II) an immediate and irreparable injury will
occur if such seizure is not ordered;
‘‘(III) the harm to the applicant of denying
the application outweighs the harm to the legiti-
mate interests of the person against whom seizure
would be ordered of granting the application and
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130 STAT. 377
substantially outweighs the harm to any third par- ties who may be harmed by such seizure;
‘‘(IV) the applicant is likely to succeed in showing that—
‘‘(aa) the information is a trade secret;
and
‘‘(bb) the person against whom seizure
would be ordered—
‘‘(AA) misappropriated the trade
secret of the applicant by improper means;
or
‘‘(BB) conspired to use improper
means to misappropriate the trade secret
of the applicant;
‘‘(V) the person against whom seizure would
be ordered has actual possession of—
‘‘(aa) the trade secret; and
‘‘(bb) any property to be seized;
‘‘(VI) the application describes with reasonable
particularity the matter to be seized and, to the
extent reasonable under the circumstances, identi-
fies the location where the matter is to be seized;
‘‘(VII) the person against whom seizure would
be ordered, or persons acting in concert with such
person, would destroy, move, hide, or otherwise
make such matter inaccessible to the court, if the
applicant were to proceed on notice to such person;
and
‘‘(VIII) the applicant has not publicized the
requested seizure.
‘‘(B) ELEMENTS OF ORDER.—If an order is issued under
subparagraph (A), it shall—
‘‘(i) set forth findings of fact and conclusions of
law required for the order;
‘‘(ii) provide for the narrowest seizure of property
necessary to achieve the purpose of this paragraph
and direct that the seizure be conducted in a manner
that minimizes any interruption of the business oper-
ations of third parties and, to the extent possible,
does not interrupt the legitimate business operations
of the person accused of misappropriating the trade
secret;
‘‘(iii)(I) be accompanied by an order protecting the
seized property from disclosure by prohibiting access
by the applicant or the person against whom the order
is directed, and prohibiting any copies, in whole or
in part, of the seized property, to prevent undue dam-
age to the party against whom the order has issued
or others, until such parties have an opportunity to
be heard in court; and
‘‘(II) provide that if access is granted by the court
to the applicant or the person against whom the order
is directed, the access shall be consistent with subpara-
graph (D);
‘‘(iv) provide guidance to the law enforcement offi-
cials executing the seizure that clearly delineates the
scope of the authority of the officials, including—
130 STAT. 378 PUBLIC LAW 114–153—MAY 11, 2016
Deadline. Notification.
Courts.
‘‘(I) the hours during which the seizure may be executed; and
‘‘(II) whether force may be used to access locked areas;
‘‘(v) set a date for a hearing described in subpara- graph (F) at the earliest possible time, and not later than 7 days after the order has issued, unless the party against whom the order is directed and others harmed by the order consent to another date for the hearing, except that a party against whom the order has issued or any person harmed by the order may move the court at any time to dissolve or modify the order after giving notice to the applicant who obtained the order; and
‘‘(vi) require the person obtaining the order to pro- vide the security determined adequate by the court for the payment of the damages that any person may be entitled to recover as a result of a wrongful or excessive seizure or wrongful or excessive attempted seizure under this paragraph.
‘‘(C) PROTECTION FROM PUBLICITY.—The court shall take appropriate action to protect the person against whom an order under this paragraph is directed from publicity, by or at the behest of the person obtaining the order, about such order and any seizure under such order.
‘‘(D) MATERIALS IN CUSTODY OF COURT.—
‘‘(i) IN GENERAL.—Any materials seized under this
paragraph shall be taken into the custody of the court.
The court shall secure the seized material from phys-
ical and electronic access during the seizure and while
in the custody of the court.
‘‘(ii) STORAGE MEDIUM.—If the seized material
includes a storage medium, or if the seized material
is stored on a storage medium, the court shall prohibit
the medium from being connected to a network or
the Internet without the consent of both parties, until
the hearing required under subparagraph (B)(v) and
described in subparagraph (F).
‘‘(iii) PROTECTION OF CONFIDENTIALITY.—The court
shall take appropriate measures to protect the con-
fidentiality of seized materials that are unrelated to
the trade secret information ordered seized pursuant
to this paragraph unless the person against whom
the order is entered consents to disclosure of the mate-
rial.
‘‘(iv) APPOINTMENT OF SPECIAL MASTER.—The court
may appoint a special master to locate and isolate
all misappropriated trade secret information and to
facilitate the return of unrelated property and data
to the person from whom the property was seized.
The special master appointed by the court shall agree
to be bound by a non-disclosure agreement approved
by the court.
‘‘(E) SERVICE OF ORDER.—The court shall order that
service of a copy of the order under this paragraph, and
the submissions of the applicant to obtain the order, shall
be made by a Federal law enforcement officer who, upon
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130 STAT. 379
making service, shall carry out the seizure under the order. The court may allow State or local law enforcement officials to participate, but may not permit the applicant or any agent of the applicant to participate in the seizure. At the request of law enforcement officials, the court may allow a technical expert who is unaffiliated with the applicant and who is bound by a court-approved non-disclo- sure agreement to participate in the seizure if the court determines that the participation of the expert will aid the efficient execution of and minimize the burden of the seizure.
‘‘(F) SEIZURE HEARING.—
‘‘(i) DATE.—A court that issues a seizure order
shall hold a hearing on the date set by the court
under subparagraph (B)(v).
‘‘(ii) BURDEN OF PROOF.—At a hearing held under
this subparagraph, the party who obtained the order
under subparagraph (A) shall have the burden to prove
the facts supporting the findings of fact and conclusions
of law necessary to support the order. If the party
fails to meet that burden, the seizure order shall be
dissolved or modified appropriately.
‘‘(iii) DISSOLUTION OR MODIFICATION OF ORDER.—
A party against whom the order has been issued or
any person harmed by the order may move the court
at any time to dissolve or modify the order after giving
notice to the party who obtained the order.
‘‘(iv) DISCOVERY TIME LIMITS.—The court may
make such orders modifying the time limits for dis-
covery under the Federal Rules of Civil Procedure as
may be necessary to prevent the frustration of the
purposes of a hearing under this subparagraph.
‘‘(G) ACTION FOR DAMAGE CAUSED BY WRONGFUL SEI-
ZURE.—A person who suffers damage by reason of a wrong-
ful or excessive seizure under this paragraph has a cause
of action against the applicant for the order under which
such seizure was made, and shall be entitled to the same
relief as is provided under section 34(d)(11) of the Trade-
mark Act of 1946 (15 U.S.C. 1116(d)(11)). The security
posted with the court under subparagraph (B)(vi) shall
not limit the recovery of third parties for damages.
‘‘(H) MOTION FOR ENCRYPTION.—A party or a person
who claims to have an interest in the subject matter seized
may make a motion at any time, which may be heard
ex parte, to encrypt any material seized or to be seized
under this paragraph that is stored on a storage medium.
The motion shall include, when possible, the desired
encryption method.
‘‘(3) REMEDIES.—In a civil action brought under this sub-
section with respect to the misappropriation of a trade secret,
a court may—
‘‘(A) grant an injunction—
‘‘(i) to prevent any actual or threatened misappro-
priation described in paragraph (1) on such terms as
the court deems reasonable, provided the order does
not—
Determination.
130 STAT. 380 PUBLIC LAW 114–153—MAY 11, 2016
‘‘(I) prevent a person from entering into an employment relationship, and that conditions placed on such employment shall be based on evi- dence of threatened misappropriation and not merely on the information the person knows; or
‘‘(II) otherwise conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business;
‘‘(ii) if determined appropriate by the court, requiring affirmative actions to be taken to protect the trade secret; and
‘‘(iii) in exceptional circumstances that render an injunction inequitable, that conditions future use of the trade secret upon payment of a reasonable royalty for no longer than the period of time for which such use could have been prohibited;
‘‘(B) award—
‘‘(i)(I) damages for actual loss caused by the mis-
appropriation of the trade secret; and
‘‘(II) damages for any unjust enrichment caused
by the misappropriation of the trade secret that is
not addressed in computing damages for actual loss;
or
‘‘(ii) in lieu of damages measured by any other
methods, the damages caused by the misappropriation
measured by imposition of liability for a reasonable
royalty for the misappropriator’s unauthorized disclo-
sure or use of the trade secret;
‘‘(C) if the trade secret is willfully and maliciously
misappropriated, award exemplary damages in an amount
not more than 2 times the amount of the damages awarded
under subparagraph (B); and
‘‘(D) if a claim of the misappropriation is made in
bad faith, which may be established by circumstantial evi-
dence, a motion to terminate an injunction is made or
opposed in bad faith, or the trade secret was willfully
and maliciously misappropriated, award reasonable attor-
ney’s fees to the prevailing party.
‘‘(c) JURISDICTION.—The district courts of the United States
shall have original jurisdiction of civil actions brought under this
section.
‘‘(d) PERIOD OF LIMITATIONS.—A civil action under subsection
(b) may not be commenced later than 3 years after the date on
which the misappropriation with respect to which the action would
relate is discovered or by the exercise of reasonable diligence should
have been discovered. For purposes of this subsection, a continuing
misappropriation constitutes a single claim of misappropriation.’’.
(b) DEFINITIONS.—Section 1839 of title 18, United States Code,
is amended—
(1) in paragraph (3)—
(A) in subparagraph (B), by striking ‘‘the public’’ and
inserting ‘‘another person who can obtain economic value
from the disclosure or use of the information’’; and
(B) by striking ‘‘and’’ at the end;
(2) in paragraph (4), by striking the period at the end
and inserting a semicolon; and
(3) by adding at the end the following:
PUBLIC LAW 114–153—MAY 11, 2016
130 STAT. 381
‘‘(5) the term ‘misappropriation’ means—
‘‘(A) acquisition of a trade secret of another by a person
who knows or has reason to know that the trade secret
was acquired by improper means; or
‘‘(B) disclosure or use of a trade secret of another
without express or implied consent by a person who—
‘‘(i) used improper means to acquire knowledge
of the trade secret;
‘‘(ii) at the time of disclosure or use, knew or
had reason to know that the knowledge of the trade
secret was—
‘‘(I) derived from or through a person who
had used improper means to acquire the trade
secret;
‘‘(II) acquired under circumstances giving rise
to a duty to maintain the secrecy of the trade
secret or limit the use of the trade secret; or
‘‘(III) derived from or through a person who
owed a duty to the person seeking relief to main-
tain the secrecy of the trade secret or limit the
use of the trade secret; or
‘‘(iii) before a material change of the position of
the person, knew or had reason to know that—
‘‘(I) the trade secret was a trade secret; and
‘‘(II) knowledge of the trade secret had been
acquired by accident or mistake;
‘‘(6) the term ‘improper means’—
‘‘(A) includes theft, bribery, misrepresentation, breach
or inducement of a breach of a duty to maintain secrecy,
or espionage through electronic or other means; and
‘‘(B) does not include reverse engineering, independent
derivation, or any other lawful means of acquisition; and
‘‘(7) the term ‘Trademark Act of 1946’ means the Act enti-
tled ‘An Act to provide for the registration and protection of
trademarks used in commerce, to carry out the provisions of
certain international conventions, and for other purposes,
approved July 5, 1946 (15 U.S.C. 1051 et seq.) (commonly
referred to as the ‘‘Trademark Act of 1946’’ or the ‘‘Lanham
Act’’)’.’’.
(c) EXCEPTIONS TO PROHIBITION.—Section 1833 of title 18,
United States Code, is amended, in the matter preceding paragraph
(1), by inserting ‘‘or create a private right of action for’’ after
‘‘prohibit’’.
(d) CONFORMING AMENDMENTS.—
(1) The section heading for section 1836 of title 18, United
States Code, is amended to read as follows:
‘‘§ 1836. Civil proceedings’’.
(2) The table of sections for chapter 90 of title 18, United
States Code, is amended by striking the item relating to section
1836 and inserting the following:
‘‘1836. Civil proceedings.’’.
(e) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to any misappropriation of a trade secret (as defined in section 1839 of title 18, United States Code, as
18 USC 1831 prec.
Applicability.
18 USC 1833
note.
130 STAT. 382 PUBLIC LAW 114–153—MAY 11, 2016
18 USC 1833 note.
18 USC 1833 note.
18 USC 1832 note.
amended by this section) for which any act occurs on or after the date of the enactment of this Act.
(f) RULE OF CONSTRUCTION.—Nothing in the amendments made by this section shall be construed to modify the rule of construction under section 1838 of title 18, United States Code, or to preempt any other provision of law.
(g) APPLICABILITY TO OTHER LAWS.—This section and the amendments made by this section shall not be construed to be a law pertaining to intellectual property for purposes of any other Act of Congress.
SEC. 3. TRADE SECRET THEFT ENFORCEMENT.
(a) IN GENERAL.—Chapter 90 of title 18, United States Code, is amended—
(1) in section 1832(b), by striking ‘‘$5,000,000’’ and inserting
‘‘the greater of $5,000,000 or 3 times the value of the stolen
trade secret to the organization, including expenses for research
and design and other costs of reproducing the trade secret
that the organization has thereby avoided’’; and
(2) in section 1835—
(A) by striking ‘‘In any prosecution’’ and inserting the
following:
‘‘(a) IN GENERAL.—In any prosecution’’; and
(B) by adding at the end the following:
‘‘(b) RIGHTS OF TRADE SECRET OWNERS.—The court may not
authorize or direct the disclosure of any information the owner
asserts to be a trade secret unless the court allows the owner
the opportunity to file a submission under seal that describes the
interest of the owner in keeping the information confidential. No
submission under seal made under this subsection may be used
in a prosecution under this chapter for any purpose other than
those set forth in this section, or otherwise required by law. The
provision of information relating to a trade secret to the United
States or the court in connection with a prosecution under this
chapter shall not constitute a waiver of trade secret protection,
and the disclosure of information relating to a trade secret in
connection with a prosecution under this chapter shall not constitute
a waiver of trade secret protection unless the trade secret owner
expressly consents to such waiver.’’.
(b) RICO PREDICATE OFFENSES.—Section 1961(1) of title 18,
United States Code, is amended by inserting ‘‘sections 1831 and
1832 (relating to economic espionage and theft of trade secrets),’’
before ‘‘section 1951’’.
SEC. 4. REPORT ON THEFT OF TRADE SECRETS OCCURRING ABROAD.
(a) DEFINITIONS.—In this section:
(1) DIRECTOR.—The term ‘‘Director’’ means the Under Sec-
retary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office.
(2) FOREIGN INSTRUMENTALITY, ETC.—The terms ‘‘foreign
instrumentality’’, ‘‘foreign agent’’, and ‘‘trade secret’’ have the
meanings given those terms in section 1839 of title 18, United
States Code.
(3) STATE.—The term ‘‘State’’ includes the District of
Columbia and any commonwealth, territory, or possession of
the United States.
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130 STAT. 383
(4) UNITED STATES COMPANY.—The term ‘‘United States company’’ means an organization organized under the laws of the United States or a State or political subdivision thereof. (b) REPORTS.—Not later than 1 year after the date of enactment
of this Act, and biannually thereafter, the Attorney General, in consultation with the Intellectual Property Enforcement Coordi- nator, the Director, and the heads of other appropriate agencies, shall submit to the Committees on the Judiciary of the House of Representatives and the Senate, and make publicly available on the Web site of the Department of Justice and disseminate to the public through such other means as the Attorney General may identify, a report on the following:
(1) The scope and breadth of the theft of the trade secrets of United States companies occurring outside of the United States.
(2) The extent to which theft of trade secrets occurring outside of the United States is sponsored by foreign govern- ments, foreign instrumentalities, or foreign agents.
(3) The threat posed by theft of trade secrets occurring outside of the United States.
(4) The ability and limitations of trade secret owners to prevent the misappropriation of trade secrets outside of the United States, to enforce any judgment against foreign entities for theft of trade secrets, and to prevent imports based on theft of trade secrets overseas.
(5) A breakdown of the trade secret protections afforded United States companies by each country that is a trading partner of the United States and enforcement efforts available and undertaken in each such country, including a list identi- fying specific countries where trade secret theft, laws, or enforcement is a significant problem for United States compa- nies.
(6) Instances of the Federal Government working with foreign countries to investigate, arrest, and prosecute entities and individuals involved in the theft of trade secrets outside of the United States.
(7) Specific progress made under trade agreements and treaties, including any new remedies enacted by foreign coun- tries, to protect against theft of trade secrets of United States companies outside of the United States.
(8) Recommendations of legislative and executive branch actions that may be undertaken to—
(A) reduce the threat of and economic impact caused by the theft of the trade secrets of United States companies occurring outside of the United States;
(B) educate United States companies regarding the threats to their trade secrets when taken outside of the United States;
(C) provide assistance to United States companies to reduce the risk of loss of their trade secrets when taken outside of the United States; and
(D) provide a mechanism for United States companies to confidentially or anonymously report the theft of trade secrets occurring outside of the United States.
SEC. 5. SENSE OF CONGRESS.
It is the sense of Congress that—
Consultation. Public information. Web posting.
Recommenda- tions.
130 STAT. 384 PUBLIC LAW 114–153—MAY 11, 2016
28 USC 620 note. Deadline.
Records.
(1) trade secret theft occurs in the United States and around the world;
(2) trade secret theft, wherever it occurs, harms the compa- nies that own the trade secrets and the employees of the companies;
(3) chapter 90 of title 18, United States Code (commonly known as the ‘‘Economic Espionage Act of 1996’’), applies broadly to protect trade secrets from theft; and
(4) it is important when seizing information to balance the need to prevent or remedy misappropriation with the need to avoid interrupting the—
(A) business of third parties; and
(B) legitimate interests of the party accused of wrong-
doing.
SEC. 6. BEST PRACTICES.
(a) IN GENERAL.—Not later than 2 years after the date of enactment of this Act, the Federal Judicial Center, using existing resources, shall develop recommended best practices for—
(1) the seizure of information and media storing the information; and
(2) the securing of the information and media once seized. (b) UPDATES.—The Federal Judicial Center shall update the recommended best practices developed under subsection (a) from
time to time.
(c) CONGRESSIONAL SUBMISSIONS.—The Federal Judicial Center
shall provide a copy of the recommendations developed under sub-
section (a), and any updates made under subsection (b), to the—
(1) Committee on the Judiciary of the Senate; and
(2) Committee on the Judiciary of the House of Representa-
tives.
SEC. 7. IMMUNITY FROM LIABILITY FOR CONFIDENTIAL DISCLOSURE OF A TRADE SECRET TO THE GOVERNMENT OR IN A COURT FILING.
(a) AMENDMENT.—Section 1833 of title 18, United States Code, is amended—
(1) by striking ‘‘This chapter’’ and inserting ‘‘(a) IN GEN-
ERAL.—This chapter’’;
(2) in subsection (a)(2), as designated by paragraph (1),
by striking ‘‘the reporting of a suspected violation of law to
any governmental entity of the United States, a State, or a
political subdivision of a State, if such entity has lawful
authority with respect to that violation’’ and inserting ‘‘the
disclosure of a trade secret in accordance with subsection (b)’’;
and
(3) by adding at the end the following:
‘‘(b) IMMUNITY FROM LIABILITY FOR CONFIDENTIAL DISCLOSURE
OF A TRADE SECRET TO THE GOVERNMENT OR IN A COURT FILING.—
‘‘(1) IMMUNITY.—An individual shall not be held criminally
or civilly liable under any Federal or State trade secret law
for the disclosure of a trade secret that—
‘‘(A) is made—
‘‘(i) in confidence to a Federal, State, or local
government official, either directly or indirectly, or to
an attorney; and
‘‘(ii) solely for the purpose of reporting or inves-
tigating a suspected violation of law; or
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130 STAT. 385
‘‘(B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
‘‘(2) USE OF TRADE SECRET INFORMATION IN ANTI-RETALIA- TION LAWSUIT.—An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual—
‘‘(A) files any document containing the trade secret under seal; and
‘‘(B) does not disclose the trade secret, except pursuant to court order.
‘‘(3) NOTICE.—
‘‘(A) IN GENERAL.—An employer shall provide notice
of the immunity set forth in this subsection in any contract
or agreement with an employee that governs the use of
a trade secret or other confidential information.
‘‘(B) POLICY DOCUMENT.—An employer shall be consid-
ered to be in compliance with the notice requirement in
subparagraph (A) if the employer provides a cross-reference
to a policy document provided to the employee that sets
forth the employer’s reporting policy for a suspected viola-
tion of law.
‘‘(C) NON-COMPLIANCE.—If an employer does not
comply with the notice requirement in subparagraph (A),
the employer may not be awarded exemplary damages
or attorney fees under subparagraph (C) or (D) of section
1836(b)(3) in an action against an employee to whom notice
was not provided.
‘‘(D) APPLICABILITY.—This paragraph shall apply to
contracts and agreements that are entered into or updated
after the date of enactment of this subsection.
‘‘(4) EMPLOYEE DEFINED.—For purposes of this subsection,
the term ‘employee’ includes any individual performing work
as a contractor or consultant for an employer.
‘‘(5) RULE OF CONSTRUCTION.—Except as expressly provided
for under this subsection, nothing in this subsection shall be
construed to authorize, or limit liability for, an act that is
otherwise prohibited by law, such as the unlawful access of
material by unauthorized means.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 1838
of title 18, United States Code, is amended by striking ‘‘This
Contracts.
Contracts.
130 STAT. 386 PUBLIC LAW 114–153—MAY 11, 2016
chapter’’ and inserting ‘‘Except as provided in section 1833(b), this chapter’’.
Approved May 11, 2016.
LEGISLATIVE HISTORY—S. 1890:
HOUSE REPORTS: No. 114–529 (Comm. on the Judiciary). SENATE REPORTS: No. 114–220 (Comm. on the Judiciary). CONGRESSIONAL RECORD, Vol. 162 (2016):
Apr. 4, considered and passed Senate. Apr. 27, considered and passed House.
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2016): May 11, Presidential remarks.
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