Seize This Opportunity to Take Advantage of Federal Trade Secret Protection!
On May 11, 2016, President Obama signed the Defend Trade Secrets Act, which expands the federal government’s regulation and protection of intellectual property to cover trade secrets. The DTSA authorizes a federal, private right of action for companies and individuals for trade secret misappropriation and seeks to standardize the remedies available to trade secret owners who previously had to rely upon varying state laws for trade secret protection. In addition to granting trade secret owners access to the federal courts, the DTSA also creates a new and potentially powerful tool—the civil seizure order—for companies and individuals to address trade secret theft. With the enactment of the DTSA expected any day now, the time is ripe for companies to review and update the means by which they protect their intellectual property not only to maximize protection under existing laws but also to avail themselves of the new remedies afforded by the DTSA.
Overview of the DTSA
Amending the Economic Espionage Act of 1996, which criminalizes certain trade secret misappropriations, the DTSA establishes a federal civil cause of action for owners of trade secrets that are “related to a product or service used in, or intended for use in, interstate or foreign commerce.” The DTSA does not replace state laws but instead offers a federal venue and various remedies to companies and individuals seeking to protect their trade secrets. Among those remedies, including actual damages, injunctive relief, and attorneys’ fees, the DTSA establishes a unique mechanism for confiscating trades secrets in situations where traditional remedies are insufficient to protect the trade secret holder.
Much like the remedies currently available under state law, the DTSA provides for injunctive relief, actual damages, exemplary damages (up to 2 times the amount of actual damages for willful and malicious misappropriation), and reasonable attorneys’ fees. The new, and somewhat controversial, remedy created by the DTSA is the right to seek an ex parte order of civil seizure to seize allegedly misappropriated trade secrets in the defendant’s possession. Specifically, the DTSA authorizes a court in “extraordinary circumstances” to order the seizure of “property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.” In addition to the traditional elements of proof required to obtain injunctive relief, an applicant seeking issuance of a seizure order must demonstrate: (1) that the person against whom seizure would be ordered has actual possession of the trade secret and any property to be seized; (2) with “reasonable particularity” the matter to be seized; (3) that the person or persons against whom seizure would be ordered would destroy, hide, or move the trade secrets if notice was given; and (4) “the applicant has not publicized the requested seizure.” Although it remains to be seen how courts will respond to requests for seizure orders, the availability of this exceptional remedy could be a powerful weapon to add to the arsenal in the fight against trade secret theft.
Necessary Steps for Businesses and Employers
The DTSA is a significant change to intellectual property law and provides important new ways of protecting trade secrets from misappropriation. With the additional protections, however, come additional requirements. For instance, the DTSA includes a whistleblower protection provision requiring employers to provide notice of the whistleblower immunity provision “in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” Failure to comply with this requirement will limit the damages an employer can recover under the DTSA from any employees who were not given the required notice.
With the DTSA in effect, now is the time to review and update the means by which you protect your trade secrets, including the language contained in your employment agreements, policy manuals, and any other documents governing employees’ use of trade secrets. Investing in these measures at the outset of the DTSA’s enactment is an important step for ensuring your ability to take full advantage of the DTSA’s protections and safeguarding your company’s most valuable assets.
For more information regarding the Defend Trade Secrets Act, contact:
Erika Birg, 404.322.6110, email@example.com
Jenny Case, 404.322.6465, firstname.lastname@example.org
Mark Keenan, 404.322.6111, email@example.com
Michelle Johnson, 404.322.6167, firstname.lastname@example.org
The articles published in this newsletter are intended only to provide general information on the subjects covered. The contents should not be construed as legal advice or a legal opinion. Readers should consult with legal counsel to obtain specific legal advice based on particular situations.