Source: http://patentarcade.com/2016/05/obama-signs-law-allowing-trade-secre.html
Timestamp: 2019-04-18 14:34:24+00:00

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Yesterday, President Obama signed the Defend Trade Secrets Act (DTSA), enacting a federal trade secrets law. Much of the law existed under the federal Economic Espionage Act of 1996 (EEA). However, for the first time, the DTSA provides federal jurisdiction for civil cases involving the misappropriation of trade secrets.
Nevertheless, the DTSA (which is grounded in the commerce clause of the U.S. Constitution) will not preempt state law, unlike patent and copyright laws, making the DTSA akin to trademark law coexisting with state law. Under the DTSA, an owner of a trade secret may bring a federal civil action for the misappropriation of a “trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce.”3 Civil claims for trade secret misappropriation that are only related to intrastate commerce must still be brought in state courts, unless there is diversity or supplemental jurisdiction. Also, claims under DTSA must be brought within three years after the date on which the misappropriation is discovered or should have been discovered by the exercise of reasonable diligence.
Like most state trade secret law, remedies under DTSA include injunctive relief and monetary relief. However, seizure of property is a new remedy contemplated by the DTSA. A seizure request can be brought on an ex partebasis for the seizure of property necessary to prevent the dissemination of the trade secret that is the subject of the action.
Also, in order to receive all available remedies under the DTSA, employers have an affirmative obligation to provide notice to employees of the immunity provisions.14 Failure to comply with this affirmative obligation will preclude the employer from recovering “exemplary damages or attorney fees.”15 The employer may provide the notice in any contract or agreement with an employee that governs the use of a trade secret or other confidential information or by providing a cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of law.16 Also, the definition of “employees” in the DTSA is very broadly defined in that it includes conventional employees as well as any individual performing work as a contractor or consultant.17 In view of the notice requirement, employers may be advised to review all employment-related contract or agreement documents that govern the use of a trade secret or other confidential information to ensure that these documents provide notice to employees of their rights under the immunity provision of the DTSA. The notice requirement applies to “contracts and agreements that are entered into or updated after the date of enactment [of the DTSA].” Therefore, while employers are not explicitly required to provide notice of the immunity to current employees, it may be advisable to amend contracts (or any other agreements that govern the use of a trade secret or other confidential information) with current employees in accordance with the notice requirement of the DTSA.
The DTSA also protects former employees by restricting employers from preventing former employees from working at another company on the basis of the inevitable disclosure of trade secrets. Using the inevitable disclosure doctrine, employers in certain states can enjoin a former employee from taking a new job at another company that would inevitably result in the use of the company’s trade secrets. The DTSA does not allow for injunctive relief if doing so would “prevent a person from entering into an employment relationship,” thereby rejecting the inevitable disclosure doctrine.
Time will tell whether the DTSA brings conformity to trade secret litigation as the new act does not preclude circuit splits. That being said, the DTSA gives litigants more options in enforcing trade secrets at a juncture where many patent rights are being challenged at the U.S. Patent and Trademark Office. Whether to file a civil trade secret complaint in state or federal court will depend on a multitude of factors, such as the desired results of the plaintiff and whether the immunity provisions will apply. The broad definition of “employee” in the DTSA highlights the importance of non-disclosure agreements and the monitoring of relationships with contractors and vendors (both domestic and abroad) that may have access to confidential information. Moving forward, companies should review their policies and agreements to ensure that they are in compliance with the immunity provisions and have a proper notice in place.
Please click here to view Obama’s remarks at the signing of the DTSA.
1See, Brian Yeh, “Protection of Trade Secrets: Overview of Current Law and Legislation,” p. 6.
2See, Brian Yeh, “Protection of Trade Secrets: Overview of Current Law and Legislation,” p. 6.
3See, 18 U.S.C. §1836 (b)(1).
5See, 18 U.S.C. §1839 (5).
6See, 18 U.S.C. §1839 (6).
7See, 18 U.S.C. §1836 (b)2(A).
9See, 18 U.S.C. §1836 (b)2(F)(iii).
12See, 18 U.S.C. §1833 (b)(2).
14See,18 U.S.C. §1833 (b)(3)(The DTSA does not provide guidance on any verbiage that would constitute sufficient notice).
15See, 18 U.S.C. §1833 (b)(3)(C).
16See, 18 U.S.C. §1833 (b)(3)(B).
17See, 18 U.S.C. §1833 (b)(4)).

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