The Protecting American Intellectual Property Act

By Jim Astrachan and Kaitlin Corey

The bipartisan Protecting American Intellectual Property Act was passed by the U.S. Senate and House of Representatives and sent on to President Biden for signature. Although the bill proclaims to protect intellectual property, its aim is the protection of trade secrets. Maybe. And likely there is a real back story to why this piece of legislative sausage came out of the sausage stuffer the way it did.

A quick read shows it is full of issues. The first is the number of undefined terms, or criteria, that must be established in order for a foreign person to have violated this law and be subject to mandatory sanctions imposed by the President.

For example, to be a violator, a foreign person must knowingly engage in significant theft of trade secrets of United States persons. To constitute a violation of this Act, those violations must be reasonably likely to result in a significant threat to national security, foreign policy or economic health or financial stability of the United States.

The term trade secrets is not defined in the Act, nor is there any objective criteria written to determine whether any of the above italicized factors have been met. The President is provided a great deal of discretion to determine whether friend or foe makes the list he is required to send to Congress annually.

Once on this list, the President must impose five sanctions against the offender and may impose sanctions against its CEO and members of its board of directors. Perhaps, politically, a good reason to keep “friends of friends” off the list.

Nor is there any protection provided in the Act for those U.S. companies that report their trade secrets have been the subject of knowing theft. This is because there is nothing in the Act that safeguards the reporting by these companies of the theft in sufficient detail to apprise the government that they own trade secrets and that their trade sections have been stolen. Companies that report will certainly want to assure that their trade secrets, if disclosed in necessary detail, will not be the subject of disclosure by the government or discovery by an opponent.

There is some cynicism that this will really do the intended job. We will need to wait to see how this works in operation before we so determine. Hopefully, the government will share the results of this Act with the people it is intended to protect.