China has failed to respect intellectual property rights for decades, and U.S. businesses have suffered. Thankfully, those companies are getting help from the Trump administration.
In late 2017, the U.S. Chamber of Commerce and other leading business advocates asked the Trump administration to elevate the issue of trade secret protections in trade talks with other nations. They wrote that trade secret theft puts “thousands of high-paying jobs in the United States at risk, while also posing potential national security threats.”
Twenty-one months later, it’s clear that the Trump administration has responded to that call, and there is evidence that its efforts are making a difference.
Earlier this year, the Chinese government took the unprecedented action of adopting measures meant to improve trade secret protections in that country. Whether those reforms turn out to be real and significant remains to be seen, but it at least signals the Trump administration has increased pressure on China.
Closer to home, the recently negotiated United States-Mexico-Canada Agreement also shows signs of the administration’s commitment to trade secret protections. The proposed deal includes the strongest standards of protection for trade secrets ever negotiated in a free trade agreement.
If ratified, the deal would result in increased civil and criminal penalties for those caught misappropriating intellectual property.
The administration’s commitment on this issue is a win for American business and the economy. According to one estimate, trade secret theft costs the U.S. economy between $180 billion and $540 billion per year.
Companies must remain vigilant to protect their intellectual property, with includes algorithms, codes, and data. These give them a competitive edge in the marketplace and serve to underpin today’s innovative economy.
While companies have multiple ways to legally protect this property—for instance, getting patents—they are increasingly choosing to follow trade secret guidelines, which are laid out in law. And, unlike patents, trade secret protections do not require public disclosure.
In recent months, some voices have suggested Congress begin to undo trade secret protections here at home. This comes less than three years after Republicans and Democrats joined in Congress to improve trade secret protections by passing the Defend Trade Secret Acts of 2016.
Some criticize trade secret laws as opening the door to frivolous lawsuits. Recently, they’ve misleadingly cited a $700 million verdict in a Texas lawsuit involving two real estate companies, Title Source and HouseCanary.
But the Texas case is actually a perfect illustration of the legal system’s success and why we need trade secret laws.
According to coverage of the case, Title Source entered into a contract with HouseCanary to share data and technology. Once Title Source had access to HouseCanary’s data and products, its leadership began emailing about how to reverse-engineer HouseCanary’s technology in order to create their own.
The evidence at trial showed TitleSource engaged in this misbehavior even though it signed a contract promising not to do so.
There’s a name for this kind of corporate maleficence: trade secret theft. It is exactly the kind of predatory action that the U.S. government and business community are seeking to stamp out internationally, and it should not go unpunished here at home.
Leaders in Congress and state capitols should continue to strengthen trade secret protections. Setting the bar high is important, especially as U.S. leaders seek to convince the international community to catch up to U.S. standards.
The Chamber and others were right to suggest to the Trump administration that trade secret protections should be a priority in trade negotiations. Rolling back protections here at home would only make it harder for the administration to succeed.