Practice Area
The Protecting American Intellectual Property Act
Share
S. 1294 Passes in Congress – President Biden Signs Bill into Law
Pittsburgh, Pennsylvania IP Lawyers | The Protecting American Intellectual Property Act | S. 1984| 2000 | Trade Secrets | DTSA
In furtherance of the U.S. Government’s effort to protect American intellectual property, the House of Representatives passed the Protecting American Intellectual Property Act on December 22, 2022. This quickly followed the Senate’s passing of the Act on December 20, 2022. President Biden signed the bill into Law on January 5, 2023. See Text of the Enrolled Bill here. Pittsburgh, Pennsylvania IP Lawyers | The Protecting American Intellectual Property Act | S. 1984| 2000 | Trade Secrets | DTSA
The Protecting American Intellectual Property Act requires that the President periodically report “a list of foreign individuals and entities that have knowingly engaged in, benefited from, or assisted in the significant theft of U.S. trade secrets that materially contributed to a significant threat to U.S. national security, foreign policy, or economic health.”[1] The first report will be six (6) months after the Act is entered into law, with an annual report every year thereafter. The report shall also list foreign individuals who are chief executive officers or board members of any foreign entity engaging in the theft identified by any report.
Subsequently, the bill requires:
- For any firm identified in the report to Congress, the President must impose at least five sanctions from a comprehensive list. The list includes property blocking sanctions, export prohibitions, the prohibition of loans from U.S. and international financial institutions, procurement sanctions, and prohibition of banking transactions.
- For any individual identified in the report to Congress, the President must impose property blocking sanctions and must prohibit the individual’s entry into the United States.
This Act, now law, as it has been signed by the President, stands to potentially assist American businesses in protecting their trade secrets from foreign actors in addition to the protections afforded by the Defend Trade Secrets Act (DTSA). See more information on DTSALaw®. Though the DTSA does not expressly state that a private right of action may be brought against an extraterritorial defendant, it does provide that “this chapter” “also applies to conduct occurring outside the United States if . . . an act in furtherance of the offense was committed in the United States.” 18 U.S.C. § 1837. The DTSA and the Protecting American Intellectual Property Law Act share the same definition of “trade secret” at 18 U.S.C. § 1839. Whether businesses will be able to participate in some fashion in the Presidential reports is currently unclear. However, at the very least, businesses contracting with the government or involved in critical infrastructure are likely to benefit from this development in U.S. law. The IP/DTSALaw® attorneys at Houston Harbaugh will continue to monitor this new IP law.
Pittsburgh, Pennsylvania IP Lawyers | The Protecting American Intellectual Property Act | S. 1984| 2000 | Trade Secrets | DTSA
Text of S. 1294 – Protecting American Intellectual Property Act of 2022:
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting American Intellectual
Property Act of 2022''.
SEC. 2. IMPOSITION OF SANCTIONS WITH RESPECT TO THEFT OF TRADE SECRETS
OF UNITED STATES PERSONS.
(a) Report Required.--
(1) In general.--Not later than 180 days after the date of the
enactment of this Act, and not less frequently than annually
thereafter, the President shall submit to the appropriate
congressional committees a report--
(A) identifying any foreign person the President
determines, during the period specified in paragraph (2)--
(i) has knowingly engaged in, or benefitted from,
significant theft of trade secrets of United States
persons, if the theft of such trade secrets occurred on or
after such date of enactment and is reasonably likely to
result in, or has materially contributed to, a significant
threat to the national security, foreign policy, or
economic health or financial stability of the United
States;
(ii) has provided significant financial, material, or
technological support for, or goods or services in support
of or to benefit significantly from, such theft;
(iii) is an entity that is owned or controlled by, or
that has acted or purported to act for or on behalf of,
directly or indirectly, any foreign person identified under
clause (i) or (ii); or
(iv) is a chief executive officer or member of the
board of directors of any foreign entity identified under
clause (i) or (ii);
(B) describing the nature, objective, and outcome of the
theft of trade secrets each foreign person described in
subparagraph (A)(i) engaged in or benefitted from; and
(C) assessing whether any chief executive officer or member
of the board of directors described in clause (iv) of
subparagraph (A) engaged in, or benefitted from, activity
described in clause (i) or (ii) of that subparagraph.
(2) Period specified.--The period specified in this paragraph
is--
(A) in the case of the first report required by paragraph
(1), the period beginning on the date of the enactment of this
Act and ending on the date on which the report is required to
be submitted; and
(B) in the case of each subsequent report required by
paragraph (1), the one-year period preceding the date on which
the report is required to be submitted.
(3) Form of report.--Each report required by paragraph (1)
shall be submitted in unclassified form but may include a
classified annex.
(b) Authority to Impose Sanctions.--
(1) Sanctions applicable to entities.--In the case of a foreign
entity identified under subparagraph (A) of subsection (a)(1) in
the most recent report submitted under that subsection, the
President shall impose 5 or more of the following:
(A) Blocking of property.--The President may, pursuant to
the International Emergency Economic Powers Act (50 U.S.C. 1701
et seq.), block and prohibit all transactions in all property
and interests in property of the entity if such property and
interests in property are in the United States, come within the
United States, or are or come within the possession or control
of a United States person.
(B) Inclusion on entity list.--The President may include
the entity on the entity list maintained by the Bureau of
Industry and Security of the Department of Commerce and set
forth in Supplement No. 4 to part 744 of the Export
Administration Regulations, for activities contrary to the
national security or foreign policy interests of the United
States.
(C) Export-import bank assistance for exports to sanctioned
persons.--The President may direct the Export-Import Bank of
the United States not to give approval to the issuance of any
guarantee, insurance, extension of credit, or participation in
the extension of credit in connection with the export of any
goods or services to the entity.
(D) Loans from united states financial institutions.--The
President may prohibit any United States financial institution
from making loans or providing credits to the entity totaling
more than $10,000,000 in any 12-month period unless the person
is engaged in activities to relieve human suffering and the
loans or credits are provided for such activities.
(E) Loans from international financial institutions.--The
President may direct the United States executive director to
each international financial institution to use the voice and
vote of the United States to oppose any loan from the
international financial institution that would benefit the
entity.
(F) Prohibitions on financial institutions.--The following
prohibitions may be imposed against the entity if the entity is
a financial institution:
(i) Prohibition on designation as primary dealer.--
Neither the Board of Governors of the Federal Reserve
System nor the Federal Reserve Bank of New York may
designate, or permit the continuation of any prior
designation of, the financial institution as a primary
dealer in United States Government debt instruments.
(ii) Prohibition on service as a repository of
government funds.--The financial institution may not serve
as agent of the United States Government or serve as
repository for United States Government funds.
The imposition of either sanction under clause (i) or (ii)
shall be treated as one sanction for purposes of this
paragraph, and the imposition of both such sanctions shall be
treated as 2 sanctions for purposes of this paragraph.
(G) Procurement sanction.--The United States Government may
not procure, or enter into any contract for the procurement of,
any goods or services from the entity.
(H) Foreign exchange.--The President may, pursuant to such
regulations as the President may prescribe, prohibit any
transactions in foreign exchange that are subject to the
jurisdiction of the United States and in which the entity has
any interest.
(I) Banking transactions.--The President may, pursuant to
such regulations as the President may prescribe, prohibit any
transfers of credit or payments between financial institutions
or by, through, or to any financial institution, to the extent
that such transfers or payments are subject to the jurisdiction
of the United States and involve any interest of the entity.
(J) Ban on investment in equity or debt of sanctioned
person.--The President may, pursuant to such regulations or
guidelines as the President may prescribe, prohibit any United
States person from investing in or purchasing significant
amounts of equity or debt instruments of the entity.
(K) Exclusion of corporate officers.--The President may
direct the Secretary of State to deny a visa to, and the
Secretary of Homeland Security to exclude from the United
States, any alien that the President determines is a corporate
officer or principal of, or a shareholder with a controlling
interest in, the entity.
(L) Sanctions on principal executive officers.--The
President may impose on the principal executive officer or
officers of the entity, or on individuals performing similar
functions and with similar authorities as such officer or
officers, any of the sanctions under this paragraph.
(2) Sanctions applicable to individuals.--In the case of an
alien identified under subparagraph (A) of subsection (a)(1) in the
most recent report submitted under that subsection, the following
shall apply:
(A) Blocking of property.--The President shall, pursuant to
the International Emergency Economic Powers Act (50 U.S.C. 1701
et seq.), block and prohibit all transactions in all property
and interests in property of the alien if such property and
interests in property are in the United States, come within the
United States, or are or come within the possession or control
of a United States person.
(B) Ineligibility for visas, admission, or parole.--
(i) Visas, admission, or parole.--An alien described in
subparagraph (A) of subsection (a)(1) is--
(I) inadmissible to the United States;
(II) ineligible to receive a visa or other
documentation to enter the United States; and
(III) otherwise ineligible to be admitted or
paroled into the United States or to receive any other
benefit under the Immigration and Nationality Act (8
U.S.C. 1101 et seq.).
(ii) Current visas revoked.--
(I) In general.--An alien described in subparagraph
(A) of subsection (a)(1) is subject to revocation of
any visa or other entry documentation regardless of
when the visa or other entry documentation is or was
issued.
(II) Immediate effect.--A revocation under
subclause (I) shall--
(aa) take effect pursuant to section 221(i) of
the Immigration and Nationality Act (8 U.S.C.
1201(i)); and
(bb) cancel any other valid visa or entry
documentation that is in the alien's possession.
(c) National Interest Waiver.--The President may waive the
imposition of sanctions under subsection (b) with respect to a person
if the President--
(1) determines that such a waiver is in the national interests
of the United States; and
(2) not more than 15 days after issuing the waiver, submits to
the appropriate congressional committees a notification of the
waiver and the reasons for the waiver.
(d) Implementation; Penalties.--
(1) Implementation.--The President may exercise all authorities
provided under sections 203 and 205 of the International Emergency
Economic Powers Act (50 U.S.C. 1702 and 1704) to carry out this
section.
(2) Penalties.--A person that violates, attempts to violate,
conspires to violate, or causes a violation of this section or any
regulation, license, or order issued to carry out this section
shall be subject to the penalties set forth in subsections (b) and
(c) of section 206 of the International Emergency Economic Powers
Act (50 U.S.C. 1705) to the same extent as a person that commits an
unlawful act described in subsection (a) of that section.
(e) Exceptions.--
(1) Intelligence activities.--This section shall not apply with
respect to activities subject to the reporting requirements under
title V of the National Security Act of 1947 (50 U.S.C. 3091 et
seq.) or any authorized intelligence activities of the United
States.
(2) Law enforcement activities.--Sanctions under this section
shall not apply with respect to any authorized law enforcement
activities of the United States.
(3) Exception to comply with international agreements.--
Sanctions under this section shall not apply with respect to the
admission of an alien to the United States if such admission is
necessary to comply with the obligations of the United States under
the Agreement regarding the Headquarters of the United Nations,
signed at Lake Success June 26, 1947, and entered into force
November 21, 1947, between the United Nations and the United
States, or the Convention on Consular Relations, done at Vienna
April 24, 1963, and entered into force March 19, 1967, or other
international obligations.
(4) Exception relating to importation of goods.--
(A) In general.--The authority or a requirement to impose
sanctions under this section shall not include the authority or
a requirement to impose sanctions on the importation of goods.
(B) Good defined.--In this paragraph, the term ``good''
means any article, natural or manmade substance, material,
supply, or manufactured product, including inspection and test
equipment, and excluding technical data.
(f) Sunset.--This section shall terminate on the date that is 7
years after the date of the enactment of this Act.
(g) Definitions.--In this section:
(1) Admission; admitted; alien; lawfully admitted for permanent
residence.--The terms ``admission'', ``admitted'', ``alien'', and
``lawfully admitted for permanent residence'' have the meanings
given those terms in section 101 of the Immigration and Nationality
Act (8 U.S.C. 1101).
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Banking, Housing, and Urban Affairs
and the Committee on Foreign Relations of the Senate; and
(B) the Committee on Financial Services and the Committee
on Foreign Affairs of the House of Representatives.
(3) Entity.--The term ``entity'' means a partnership,
association, trust, joint venture, corporation, group, subgroup, or
other organization.
(4) Export administration regulations.--The term ``Export
Administration Regulations'' has the meaning given that term in
section 1742 of the Export Control Reform Act of 2018 (50 U.S.C.
4801).
(5) Foreign entity.--The term ``foreign entity'' means an
entity that is not a United States person.
(6) Foreign person.--The term ``foreign person'' means any
person that is not a United States person.
(7) Knowingly.--The term ``knowingly'', with respect to
conduct, a circumstance, or a result, means that a person has
actual knowledge, or should have known, of the conduct, the
circumstance, or the result.
(8) Person.--The term ``person'' means an individual or entity.
(9) Trade secret.--The term ``trade secret'' has the meaning
given that term in section 1839 of title 18, United States Code.
(10) United states person.--The term ``United States person''
means--
(A) a United States citizen or an alien lawfully admitted
for permanent residence to the United States;
(B) an entity organized under the laws of the United States
or of any jurisdiction within the United States, including a
foreign branch of such an entity; or
(C) any person in the United States.
Pittsburgh, Pennsylvania IP Lawyers | The Protecting American Intellectual Property Act | S. 1984| 2000 | Trade Secrets | DTSA
_________________________________________________________________________________________________________________
[1] Congress.gov, S.1294 – Protecting American Intellectual Property Act of 2022, https://www.congress.gov/bill/117th-congress/senate-bill/1294?q=%7B%22search%22%3A%5B%22S+1294%22%2C%22S%22%2C%221294%22%5D%7D&s=1&r=2
