trade secrets act

On April 27, 2016, by a vote of 410-2, the U.S. House of Representatives passed the Defend Trade Secrets Act of 2016 (DTSA). The DTSA, originally sponsored by U.S. Senators Chris Coons (D-DE) and Orrin Hatch (R-UT), was passed unanimously (87–0) by the Senate in early April 2016. Prior to passage by the House, the Obama administration had indicated strong support for the legislation, so it is expected that the President will sign it any day.

Federal Remedy Created for Theft of Trade Secrets

The legislation generally amends the Economic Espionage Act of 1996 (“EEA”) in order to create a federal civil remedy for the theft of trade secrets. The provision of the DTSA closely resemble those of the Uniform Trade Secrets Act, some form of which has now been adopted by 48 states (all but New York and Massachusetts). There had been some concern, however, that the state variations weakened enforcement and led to inconsistent outcomes.

Core Provisions of the New Law

The DTSA seeks to do the following:

  •  Create a uniform standard for trade secret misappropriation by expanding the EEA to provide a federal civil remedy for trade secret misappropriation
  •  Allow injunctive relief and monetary damages in federal court to prevent disclosure of trade secrets and account for economic harm to companies whose trade secrets are misappropriated, including via ex parte property seizures (subject to various limitations)
  •  Harmonize the differences in trade secret law under the UTSA and provide for uniform discovery

New Law Provides Federal Relief Where Only State Law Relief Was Allowed

In general, the DTSA provides aggrieved parties with legal recourse in federal court via a federal trade secret cause of action. Prior to enactment of DTSA, relief was only available under the state law UTSA or common law claims. Additionally, other remedies are now available, including a seizure order. The bottom line: A party can now sue in federal court for trade secret misappropriation and seek actual damages, restitution, injunctive relief, ex parte seizure, exemplary damages, and attorney’s fees under the DTSA.

Companies Should Review Policies and Procedures

In light of the President’s likely signing of the bill, businesses should begin to review their policies and procedures related to trade secrets. In particular, businesses should review existing non-disclosure agreements to make certain that the definitions of trade secrets and confidential information is consistent with the DTSA. The DTSA provides suggested indemnity language that may also need to be incorporated into a company’s agreements.

Milwaukee Business and Commercial Litigation Attorneys

Does your business currently have information that could be protected as a trade secret? Are you concerned that those secrets are not being adequately protected? You will only be able to pursue trade secrets claims under either Wisconsin or federal law, if your company has taken reasonable steps to protect it. Many firms would profit from a trade secret audit, in which they review their secrets, their policies, and their protection strategies. Experienced, sophisticated legal counsel is a key. The Milwaukee business litigation firm of Kerkman Wagner & Dunn has over 50 years of combined legal experience representing business owners in Wisconsin. Our firm has big firm talent, and provides small firm attention. Call us at 414-278-7000 or complete our online contact form.

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