Lawyers see IP protection help in U.S. trade-secrets focus

Feb 22 (Reuters) – Attorneys say they hope stepped-up efforts by the White House to battle trade-secret theft will result in greater protection of their clients’ intellectual property and better communication between companies and the government.

The Obama administration on Wednesday announced a plan to deal with the growing theft of U.S. trade secrets by China and other countries. The plan contained few new ideas for dealing with the threat but instead emphasized tactics such as increased diplomatic pressure and greater use of trade-policy tools, improved legislation, better domestic law enforcement and more public awareness.

James Garland, a white-collar defense and investigations partner at Covington & Burling, said that the so-called “whole of government approach” laid out by the administration should better protect corporate clients’ trade secrets in several ways.

He said that the government’s commitment to sharing threats with private companies means that if the government is investigating a trade-secret theft at one technology company, it will inform other such companies it believes to be at risk.

Though that does happen on a limited basis now, the new coordinated effort is designed to make it happen quicker and with greater frequency, he said.

Companies will also be encouraged by the government’s plan to facilitate sharing of “best practices” to protect trade secrets.

While some companies have sophisticated protection methods, such as carefully limiting the number of employees with access to trade secrets, many smaller organizations currently think they can’t invest in high-level protection, Garland said.

Garland and other trade-secrets experts cautioned that the success of the program will depend on how its ideas are implemented.

The program also is relatively free of mandates. That could limit the new initiative’s impact, said R. Mark Halligan, a Nixon Peabody partner and an expert on trade-secrets litigation.


Halligan said he has long been an advocate for the types of detailed protection programs the government is looking to facilitate. However, he said, he fears that without a legislative mandate requiring particular methods of trade-secret protections, many companies will continue to put off effective implementation.

Still, the government’s enhanced focus, as well as increased recognition by the media of trade-secrets cases, could result in increased pressure on in-house counsel and, in turn, outside counsel to make sure companies’ trade-secret protection methods are up to speed, Halligan said.

Like Halligan, Cooley partner Michael Klisch said the government’s announced focus will educate the public in a previously underserved area.

That will help businesses more successfully prosecute trade-secrets cases, Klisch said, in that jurors will go into trials understanding why companies have to protect their trade secrets.

He said it will be much easier to tell jurors, “We all know how important these trade secrets are…. I’m here to protect them.”

If Assistant Attorney General Lanny Breuer’s comments from Wednesday’s conference come to fruition, jurors will hear about more criminal trade-secrets allegations as well.

Breuer encouraged businesses to notify prosecutors if they believe they’ve been a victim of a trade-secret threat and promised vigorous investigation and prosecution when appropriate.

Approaching prosecutors is something companies have been hesitant to do, said Covington’s Garland, a former U.S. Justice Department attorney. He believes the government has begun to recognize that it must work with companies to ensure that reporting trade-secret crimes won’t result in bigger headaches for a company than it already has.

More aggressive prosecutors could also have a downside, intellectual property litigator Anthony Sammi of Skadden Arps Slate Meagher & Flom said. “Companies operating in an innovation-intense industry will be at greater risk of trade secret theft accusations,” he said, “which could now include substantial criminal penalties.”


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