The Defend Trade Secrets Act:  New Federal Law, New Litigation Options

On May 11, 2016, President Obama enacted a new federal trade secret protection law known as the Defend Trade Secrets Act of 2016 (DTSA). The DTSA makes federal protection against the misappropriation of trade secrets available to private parties. Before the DTSA, private parties who sought to protect their trade secrets from misappropriation were limited to bringing claims under state law. With the enactment of the DTSA, trade secret protections are no longer limited to individual state jurisdictions as U.S. federal law reaches across all states.

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Previous Cloudigy blog posts and podcast episodes focused on the DTSA’s practical business implications—including important changes to contracts, policies, and procedures dealing with trade secrets and other confidential information. The DTSA also provides important new litigation tools to trade secret owners. Antigone Peyton outlines these litigation options in detail in part two of her blog post series on the new Act. Join Antigone Peyton and Kandis Koustenis in today’s podcast as they continue to explore these new litigation options.

In addition to providing the ability to bring forth claims directly to federal courts, the new federal protections offered under the DTSA provides trade secret owners with important new litigation options, including:

Broad Protection for Trade Secrets

The new federal law seemingly expands the definition of trade secrets in comparison to the various states’ trade secret laws. Most state laws describe a limited list of specific categories or types of information that can qualify as a trade secret. However, under the DTSA, nearly any type of information (including “all forms and types of financial, business, scientific, technical, economic, or engineering information”) may qualify as a trade secret under the DTSA, provided it is kept secret and the owner has taken reasonable steps to maintain its secrecy.

New “Secret” Trade Secret Seizure Orders

The DTSA also includes a powerful remedy for violation of another party’s trade secret rights that is currently unavailable under any state trade secret laws. Under the DTSA, a company that has experienced trade secret theft can now file a request with the courts to seize the trade secret without having to notify the party being accused of theft. Nonetheless, it is important to note that this type of ex parte seizure procedure is to be used only under extraordinary circumstances.

Trade secret owners seeking to take advantage of this seizure remedy must meet strict evidentiary requirements. The party requesting seizure must show, for example: (i) that the alleged trade secret thief “would destroy, move, hide, or otherwise make such matter inaccessible to the court” if the trade secret owner were to provide notice to the alleged thief; (ii) a detailed description of the particular property to be seized; and (iii) that other less drastic remedies, such as a preliminary injunction, are inadequate. Thus, companies seeking to utilize the seizure process will need to undertake detailed factual investigations and be prepared to furnish evidence that satisfies the abovementioned requirements before filing a seizure request.

Join Antigone Peyton and Kandis Koustenis in this podcast as they discuss these and other litigation highlights every trade secret owner should know about.

Photo credit: elhombredenegro

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