U.S. Rep. Doug Collins
“The Defend Trade Secrets Act would create a uniform federal standard for trade secret misappropriation, consistent with remedies available for other intellectual property like patents, copyrights, and trademarks, while preserving states’ ability to act in state law claims. This legislation strengthens American’s defenses against the economic harms created by trade secret theft and creates more efficient remedies to prevent trade secret theft and recover any losses.” — U.S. Representative Doug Collins, R-Ga.
As a co-sponsor of Defend Trade Secrets Act (DTSA), U.S. Rep. Doug Collins was right when he called for a law to protect companies’ trade secrets. Deterring this kind of theft is essential to preserve business value, encourage innovation, and enjoy free and fair competition in the marketplace.
Georgia, home to the Coca-Cola Company and its world famous, yet secret, formula, knows what it means for a business to rely on trade secret technology. It was trade secret laws that protected Coca-Cola confidential information from an employee who stole and attempted to sell it to PepsiCo.
Keeping the promise of the DTSA has never been more important. A recent ruling found that SK Innovation, a Korean company, deliberately acquired LG Chem proprietary information to use for its own EV battery for the automotive industry, and then destroyed thousands of documents “to hide evidence of trade secret misappropriation.” The main victim of this theft is LG Chem, a global leader in EV batteries, whose unique technology underpins a significant share of the American electric vehicle market. LG Chem invested billions of dollars over decades to develop that technology.
But another victim was Georgia, since it didn’t know the facts when it allowed SKI to break ground on a new facility in Commerce. Now the state’s leaders have been put in an untenable position, torn between the need to keep jobs and to prevent the use of stolen secrets. It shouldn’t have to be that way.
The DTSA, which was co-sponsored by Collins and supported by every member of Georgia’s federal delegation, was a landmark achievement in a long-standing effort by Congress to protect businesses against increasing theft of intellectual property.
In enacting the DTSA, Congress added civil remedies to the criminal sanctions of the Economic Espionage Act of 1996, while emphasizing its intent to use this stronger law to stamp out the growing scourge of international trade secret theft. The bipartisan support for this effort was remarkable, and the bill was approved in the Senate without a single dissenting vote. Ironically, it was not long after the enactment that SKI began to secretly acquire LG Chem’s technology.
Last year, I was retained by LG Chem to assist in an investigation by the International Trade Commission. My interest in this issue comes from a 45-year professional career focused on trade secrets as a lawyer, scholar, author and public interest advocate. In fact, I assisted the Senate Judiciary Committee in drafting the DTSA and provided expert testimony in support of it.
I am mindful of the economic benefit that Georgia wishes to secure from SKI’s planned new facility in Commerce. I also assume Georgia’s leaders wish that before they approved SKI’s plans they had known about what has been uncovered in the ITC’s investigation. The economic hurt that may result if SKI has to delay or modify construction of the factory can’t be ignored.
But neither can the massive misappropriation of trade secrets that happened first. Failing to enforce the law because it hurts now could discourage research and development in the future. This is private investment that we need to keep America ahead. Without robust enforcement of the DTSA, the security of industrial secrets all across America is jeopardized.
As the U.S. Supreme Court explained in its 1974 decision Kewanee Oil Co. v. Bicron Corp., “the maintenance of standards of commercial ethics and the encouragement of invention are the broadly stated policies behind trade secret laws.” Put another way, you can’t have investment in technology if you condone stealing another’s innovation. The success of the U.S. economy is due in no small measure to this and many other ways in which we honor the rule of law and provide a safe and reliable environment for businesses to create and protect intellectual property.
Recognizing the growing threat to that investment from international industrial espionage, Congress, through the Economic Espionage Act and the DTSA, has declared the critical importance to Georgia and our country of supporting trade secret rights. It is only through consistent enforcement of these laws that we can hope to discourage theft. In contrast, to collaborate with a company that has built its business on misappropriated trade secrets would seriously degrade the deterrent effect of the DTSA and reduce the incentive to invest for all companies.
SKI should be free to build its factory wherever it wants. But it shouldn’t be allowed to run it with someone else’s technology.
Jim Pooley is an attorney and global expert on trade secrets.
