Do We Need a Federal Trade Secret Statute?

There is a current push for federalizing civil trade secret law. I don't really understand it, quite frankly. I've listened to many folks in IP intensive industries, and their reasons for asking for it, for the most part, are nothing that can't currently be achieved procedurally under current law. I also spent most of my career litigating trade secret cases, representing both plaintiffs and defendants, and the concerns I've heard about state practice just weren't there in my experience. That's not to say there are a few outliers, but I have yet to hear of an actual, real-live compelling case where the outcome would have been different if only we had a civil federal trade secret statute. Thus, I'm not convinced that federalization will actually aid IP owners in solving the very real problem of trade secret misappropriation in the information age. It reminds me of a great line from The American President:

Well then, congratulations. It's only taken you three years to put together crime prevention legislation that has no hope of preventing crime.

This makes me wonder whether the push for federalization is because the substantive law will be different. Drafts I've seen, for example, are unclear about whether reverse engineering is a defense. That, to me, is a big deal. Changing the law of reverse engineering would be huge. Or, maybe the goal is to impose inevitable disclosure on California, which has rightly rejected that doctrine so far. I don't know, but it worries me. Those who know my work know that I usually fall much more toward the IP owner's view of life than your average academic. If this federalization thing bothers me, that's saying something.

It also worries Dave Levine (Elon; Princeton fellow) and Sharon Sandeen (Hamline), who've written Here Come the Trade Secret Trolls. They posit that the proposed statutes could have the unintended effect of causing trade secret hold-up cases by small shops that overvalue their secrets that aren't really secret.

I plan to study their argument more fully; I'm not convinced that plaintiffs will gain much purchase against the unwary without some evidence of actual misappropriation, something not required in patent law. That said, most of their article is about the federal proposals, the justifications for the federal proposals, the failures of those justifications, and alternatives that have a better chance at solving the problems that IP owners are actually worried about.

For those interested in this topic, Eric Goldman had a nice piece in Forbes last year discussing the proposals as well.