MANAGEMENT MOXIE Nimble News

The Defend Trade Secrets Act: What Does it Mean for Your Business?

This month, President Obama signed into law the most significant trade secret reform in nearly twenty years: the Defend Trade Secrets Act of 2016 (DTSA). The Act received enormous bipartisan support, illustrating how significant this issue is to business. How does the Act impact your workplace?

Historically, trade secret protection has been the exclusive domain of the states. In fact, the DTSA does not pre-empt state law but adds an additional level of federal protection for trade secret holders. Specifically, the Act allows a federal cause of action to obtain a civil seizure order and remedies for trade secret theft. If a showing of "extraordinary circumstances" is met, a federal court can issue an ex parte property seizure—a powerful tool to stop misappropriation. The Act specifies how a trade secret threshold is met, and refers to "reasonable measures" to keep the information secret. Moreover, the Act requires the information sought to be protected derives "independent economic value" for the owner(s). The federal remedies are welcome but the burden of establishing information as a trade secret is high.

The best way to protect business secrets to avoid a breach and to seek federal and state protection after a breach is:

  1. Identify and continually protect trade secrets;
  2. Establish steps to maintain secrecy;
  3. Develop a comprehensive Protection Plan; and
  4. Periodically audit your security measures.

Most importantly, the DTSA requires that employers must now provide a notice of whistle blower immunity protection in any contract or agreement with an employee (or an independent contractor or consultant).

We can help. Our lawyers have vast experience assisting businesses with trade secret matters.

US Supreme Court Rules on Constructive Discharge Clock

The US Supreme Court ruled this week that a constructive discharge claim begins to run when an employee resigns as a result of alleged discriminatory behavior—not, as the lower court had held, than the time of an employer's last act of alleged bias that led to the resignation. This ruling provides much needed clarification. In this case, the federal postal worker was granted 45 days from his constructive resignation. The clock will now run in all courts from when an employee gives "definite notice" of his or her decision to leave.

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