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Trade Secrets

This year's Report again reflects an increasingly urgent need for trading partners to effectively protect and enforce trade secrets. Trade secret theft, including industrial and economic espionage conducted by cyber means, appears to be escalating. Companies in a wide variety of industry sectors, including information and communication technologies, services, biopharmaceuticals, manufacturing, and environmental technologies, rely on the ability to protect and enforce their trade secrets and rights in other proprietary information. Indeed, trade secrets, such as business plans, internal market analysis, manufacturing methods, and recipes, are often among a company's core business assets; and a company's competitiveness may depend on its capacity to protect such assets.

If a company's trade secrets are stolen by a competitor or the agent of a competitor, it may be extremely difficult, if not impossible, to recoup past investments in R&D, and future innovation may be compromised. Moreover, trade secret theft threatens to diminish U.S. competitiveness around the globe, and puts American jobs at risk. The reach of trade secret theft into critical commercial and defense technologies poses threats to U.S. national security interests as well.

Various sources, including the Office of the National Counterintelligence Executive (ONCIX), have reported specific gaps in trade secret protection and enforcement, particularly in China. The ONCIX publication titled Foreign Spies Stealing U.S. Economic Secrets in Cyberspace, states that "Chinese actors are the world's most active and persistent perpetrators of economic espionage." Theft may arise in a variety of circumstances, including those involving departing employees taking portable storage devices containing trade secrets, failed joint ventures, cyber intrusion and hacking, and misuse of information submitted by trade secret owners to government entities for purposes of complying with regulatory obligations. In practice, effective remedies appear to be difficult to obtain in a number of countries, including in China. In addition, many countries do not provide criminal penalties for trade secret theft sufficient to deter such behavior.

Consequently, the United States uses all trade tools available to ensure that its trading partners provide robust protection for trade secrets and enforcement of trade secrets laws.

U.S. Government Strategy on Mitigating the Theft of U.S. Trade Secrets

On February 20, 2013, the U.S. Intellectual Property Enforcement Coordinator (IPEC) issued the Administration Strategy on Mitigating the Theft of U.S. Trade Secrets. The Strategy highlights 20