Trade Secret Protection

On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 (DTSA) into law. This new law creates the first private cause of action for civil trade secret misappropriation that can be brought in Federal Courts and with international implications.

The DTSA expands trade secret protection for employers that previously could enforce their trade secret rights only through state law claims, but imposes certain requirements on employers to take full advantage of its provisions. Additionally, the DTSA establishes a three-year statute of limitations and provides several remedies for successful plaintiffs, including injunctive relief, compensatory damages, exemplary damages up to two times the amount of the compensatory damages for willful and malicious misappropriation, and attorneys' fees.

While fundamentally modeled on the Uniform Trade Secrets Act (UTSA), which has been adopted by 48 states, the DTSA is distinct from the UTSA in a number of ways.

The DTSA applies only to products or services in interstate or foreign commerce.

While the UTSA prohibits any person from misappropriating the trade secrets of another, the DTSA limits actions to "owners" of misappropriated trade secrets related to products or services used in, or intended for us in, interstate or foreign commerce. The statute does not define "owner," which is likely to create a standing issue at the time litigation arises. Standing issues may also arise where questions exist about whether the property moved through interstate commerce. 

The DTSA does not require prediscovery trade secret identification. Prior to the enactment of the DTSA, many federal courts hearing state law trade secret claims would require a plaintiff to furnish a trade secret disclosure prior to conducting trade secret discovery - a requirement that generally favored defending litigants. The DTSA does not have this requirement.