It is time to update trade secret protections

President Biden signed the Protecting American Intellectual Property Act (PAIP) into law in early 2023. Lawmakers drafted it to protect American businesses from theft by foreign entities. The law tasks the White House with notifying Congress of major foreign companies that violate U.S. trade secrets and intellectual property protections. It can also impose sanctions upon businesses or individuals — the latter group would typically be executives running companies or sitting on the boards.

The new law gives the president broad authority to identify and penalize bad actors, but the administration has many priorities. U.S. businesses will serve their best interests but taking steps to protect their trade secrets.

3 tips for protecting trade secrets

It is unavoidable that U.S. businesses in the international marketplace will have foreign executives and business partners involved in their operations. It is best to be prepared to defend trade secrets. Three steps for doing this are:

1. Document trade secrets: Nearly every company has trade secrets, but it is essential to identify and voluminously document them. There may already be formal documentation for registered IP materials. Still, it is also vital to treat trade secrets the same way by documenting the sourcing and timing of trade secrets. It can safely memorialize key innovations, but it also can help prove or disprove trade secret misappropriation.
2. Take allegations seriously: Promptly initiate an internal investigation of any credible claim to understand the issue, especially if the claims are likely to appear in the president’s report as part of PAIP.
3. Vet new partners: U.S. businesses should diligently evaluate each new foreign partner brought on board. It is obviously a red flag to find that the business or individual has a history of ignoring trade secrets or IP protections, so ask more questions to determine the truth. U.S. businesses can walk away from the partnership deal if something feels wrong.

Formalize these arrangements

Trade secrets are only valid if companies take steps to protect them. Businesses in the international market or planning to expand in that direction should plan rather than sort it out after the fact. An experienced business law attorney can help set up protections, protocols and strategies that give businesses a better chance for success.