May 23, 2016 (Houston) – Just this month the President signed into law new federal jurisdiction
for misappropriation of trade secrets.
The Defend Trade Secrets Act (“DTSA) of 2016 became law on May 11, 2016 after being unanimously passed in the Senate
and ratified in the House by a vote of 410-2. The DTSA became effective
immediately for any trade secret misappropriation after May 11, 2016.
The DTSA considerably mirrors existing state law under the
Uniform Trade Secrets Act, already adopted by 48 states. The DTSA, like state laws, has similar
definition of trade secrets, similar remedies, and a three year statute
of limitations. However, the DTSA created a new
seizure procedure where a defendant “would destroy, move, hide, or otherwise make
such matter inaccessible to the court, if the applicant were to proceed
on notice to such person….” A party may seek an order for
an immediate seizure, but the court ordering same must also set a hearing
not less than seven days after the issuance of the order. Finally, the
law protects whistleblowers from retaliatory accusations of trade secret
misappropriation, so long as the whistleblowers disclose trade secret
information to government or court officials in confidence.
The DTSA does not preempt existing state law. This allows a plaintiff the
option whether to file in a federal or state court. Significantly, the
DTSA also prohibits injunctive relief based on the inevitable disclosure
doctrine, which is consistent with California law and thus should not
detrimentally impact employee mobility.
The DTSA may affect your company related to:
- The disclosure of the whistleblower immunity provisions in the DTSA in
any non-compete or employment agreements.
- Evaluating the potential prosecution or defense of a misappropriation of
trade secret claim in State vs. Federal court.
- The potential of any immediate seizure rights and how they may be used
for or against your company, employees, and proprietary information.
The DTSA allegedly brings uniformity to trade secret misappropriation suits
with full access to the federal courts for trade secret litigants which
may affect both plaintiffs and defendants.