New Federal Protection for 
Trade Secret Theft
With overwhelming bipartisan support, President Obama signed into law the Defend Trade Secrets Act ('DTSA') on May 11, 2016. The DTSA, an amendment to the Economic Espionage Act of 1996, standardizes trade secret misappropriation law and provides additional tools for employers seeking to enforce trade secret and confidentiality agreements.
The DTSA defines trade secret misappropriation as the acquisition, disclosure or use of trade secrets by "improper means." Improper means includes:
  • Theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; [but] does not include reverse engineering, independent derivation, or any other lawful means of acquisition[.]18 U.S.C. ยง 1839(5).
What Companies Need to Know About the DTSA

The Defend Trade Secrets Act:
  • Creates uniform protections and penalties, thus, eliminating the need to navigate varying state laws.
  • Adds a federal civil cause of action for trade secret theft.
  • Does not preempt state law; the DTSA works in conjunction with state laws governing trade secrets and restrictive covenants.
  • Establishes remedies including injunctive relief, royalties, actual damages for loss, damages for unjust enrichment, exemplary damages, and attorneys' fees.
  • Provides for seizure orders without notice to defendants (ex parte orders) in "extraordinary circumstances."
    • Targets of ex parte orders may sue for damages if the remedy is abused.
  • Prohibits injunctions that restrain employees from entering into new employment relationships, especially in states that view non-compete provisions unfavorably.
  • Provides whistleblower protections.
  • Imposes notice requirements about immunity for lawful disclosure of trade secrets.
What Should Employers Do to Prepare?
  • Develop comprehensive plans to protect their trade secrets against misappropriation.
  • Review "choice of law" provisions in trade secret and confidentiality agreements to ensure the most favorable legal analysis will apply since the DTSA does not preempt state laws.
  • Revise trade secret and confidentiality agreements to comply with the DTSA's immunity notice requirement or employers will lose the right to exemplary damages and attorneys' fees.
If you have questions about complying with the new DTSA requirements or have concerns about protecting your trade secrets and confidential information, please contact   Katherin Nukk-Freeman or the Nukk-Freeman & Cerra, PC attorney with whom you normally work.

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