Earlier this month, the Obama Administration issued its strategic report on mitigating the theft of U.S. trade secrets. A copy of the report is attached. The issuance of this report coincides with the release of a report by Mandiant regarding the targeted hacking of US based computers by those allegedly associated with the Chinese government. (See “Chinese Army Unit is Seen as Tied to Hacking Against U.S.,” February 18, 2013, The New York Times.) Trade secret theft has certainly been in the news lately.
The Administration’s strategic report raises several interesting points while noting that cyber intrusion of US companies and their electronic repositories is becoming a more frequent and difficult problem.
First, the Administration notes that while it intends to continue to work closely with foreign governments to combat trade secret theft from nationals in those countries, much work can and should be done closer to home. For example, the Administration intends to work with industries to promote voluntary best practices by private industry to protect their trade secrets in a holistic approach. The U.S. Intellectual Property Enforcement Coordinator, working with the DOJ and Department of State, along with other U.S. government agencies, will help facilitate the development of such best practices by U.S. industry. This work will be an aid to the steps already undertaken by many companies to protect their trade secrets, including compartmentalizing research and development projects and information, implementating information and physical security policies, and developing and utilizing human resources policies.
Another interesting point is raised by the U.S. Patent and Trademark Office in its Overview of U.S. Law and Changed Landscape, attached to the report. In that statement, the PTO notes that the landscape has changed in terms of protecting trade secret information. As the PTO states:
“The nature, protection, and enforcement of a trade secret are distinct from other forms of intellectual property. Unlike other forms of intellectual property, once disclosed publicly, the property right itself ceases to exist. Protection is provided to trade secrets only when steps are taken by the owner to maintain the secrecy of the information. Liability is not imposed for mere theft absent a showing of reasonable efforts to maintain secrecy; continual vigilance is required. What constitutes reasonable efforts is often a pivotal issue in trade secret litigation and particularly important in the digital environment.”
The PTO’s observation is worth highlighting for several reasons. One, courts will not protect companies from themselves. If companies fail to take reasonable measures to protect their information, the courts (or the US government for that matter) can do little about it. Two, as the PTO notes, continual vigilance is required. Technological advancements are a double-edged sword. While hosting data in repositories can provide employees and partners greater access to advance the business’ interests, for instance, it can also be exploited by criminals and others engaged with malicious intent.
“Advancements in technology, increased mobility, globalization, and the anonymous/pseudonymous nature of the internet are all working together to create growing challenges in protecting trade secrets. This technology has resulted in companies needing to re-evaluate what constitutes adequate protection of trade secrets in digital format and has impacted the manner in which the trade secrets are stolen.”
Technological advancements always have unforeseen consequences. Continual vigilance is needed to keep pace with these developments so that vulnerabilities do not arise that put a company’s trade secrets in jeopardy. And continual vigilance is needed so that rapid action can be taken to protect a trade secret from disclosure or use should a vulnerability go undetected and a trade secret be misappropriated.
