The Defend Trade Secrets Act

Last summer, Congress enacted the Defend Trade Secrets Act (“DTSA”), which created a federal civil cause of action for misappropriation of trade secrets. Recently, various courts have started to interpret the DTSA, and determined that it does not preempt existing state law, but gives trade secret owners the option to enforce their claims and receive more consistent outcomes than they would in state court. Prior to the DTSA’s enactment, manufacturers and sellers had to bring trade secret misappropriation claims in state court, unless the parties could establish diversity jurisdiction or an independent federal cause of action.  Because state interpretations of the Uniform Trade Secrets Act vary in every state, consistent relief was not always possible.  For example, the definition of “trade secret” and the types of remedies differ across states. However, the DTSA applies nationwide and provides a uniform statute for trade secret owners to rely on in federal court.

The DTSA has important features that will impact trade secret owners.  Notably, it defines “misappropriation” and “trade secret”, which aids in consistent enforcement across state lines.  Additionally, it creates a civil seizure mechanism, which allows courts to order the seizure of property to prevent the propagation or dissemination of the trade secret, even before a formal finding of misappropriation is established and without notice to the alleged wrongdoer.  Last, a whistleblower provision provides immunity to employees from criminal or civil liability under federal or state laws for disclosing a trade secret to an attorney or government official for purposes of reporting or investigating a suspected violation of the law or filing a lawsuit made under seal.

Most controversial is the civil seizure provision, and courts are reluctant to permit seizures unless the plaintiff establishes necessity. Also controversial, federal courts are turning to state courts for guidance in interpreting the DTSA, thus, defeating its underlying purpose of providing uniformity. However, these issues are likely to be resolved over time. Since its enactment, it is estimated that less than seventy cases have been brought under the DTSA, but the law provides an important option for those pursuing trade secret claims.

© 2017 Vandenack Weaver LLC
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Federal Civil Remedy for Misappropriation of Trade Secrets Now Available

by M. Tom Langan, II

President Obama recently signed into law legislation that creates a federal civil remedy for the misappropriation of trade secrets. Trade secrets are a form of intellectual property that consist of a business’s methods, designs, formulas, and other confidential or proprietary information that helps a business obtain economic advantages over its competitors. While there were federal remedies for misappropriation of other forms of intellectual property (i.e. trademarks, patents, copyrights etc.), trade secrets were not protected at the federal level until now. The Defend Trade Secrets Act of 2015 offers a variety of remedies, from monetary penalties to injunctive relief to even seizure orders – all designed to stop the unlawful dissemination of trade secrets. There is a 3 year statute of limitations to bring a claim based off when the misappropriation is discovered or should have been discovered based off a reasonable investigation.

© 2016 Vandenack Williams LLC
For more information, Contact Us