The Protecting American Intellectual Property Act

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.

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.