What the Defend Trade Secrets Act Means for Intellectual Property

On May 11, 2016, President Obama officially signed the Defend Trade Secrets Act or DTSA, after it had unanimously passed in the Senate and was ratified in the House with a vote of 410 to 2. This created a federal private civil action that allows for the misappropriation of trade secrets. While it does not preempt existing state law, it does provide an additional amount of relief and a 3-year statute of limitations.

The Fine Print: Ex Parte Seizures and Damages

The DTSA uses a similar definition of trade secrets to that of the Uniform Trade Secrets Act, but it also introduces an ex parte seizure procedures that can be utilized in extraordinary circumstances where whichever the party against whom the seizure is ordered may “destroy, move, hide, or otherwise make such a matter inaccessible to the court, if the applicant were to proceed on notice to such person…”

The new act also seeks to protect any seized property from disclosure by prohibiting access to said property from both the applicant and the party against whom the order is being issued, until the parties have had an opportunity to be heard in court. There are also certain time restrictions put in place, security against damages and if a person suffers any damages due to a wrongful or excessive seizure, they may be entitled to recover damages that include punitive damages and attorney fees.

Additionally, under the DTSA, trade secret owners may recover damages for their actual losses plus any damages for unjust enrichment caused by misappropriation. Alternatively, the trade secret owner can recover a reasonable royalty and if the trade secret was willfully or maliciously appropriated, a court may double any damages awarded and award attorney’s fees.

Whistle-Blower Immunity and Far-Reaching Consequences

The DTSA will also provide whistle-blower employees immunity against criminal and civil liberties under any and all federal and state trade secret laws, when disclosures are made to government official or an attorney. With this long awaited remedy for trade secret disputes, companies will now need to evaluate their policies and litigation options. It may be wise to give notice of the whistle-blower immunity provisions to all employees and contractors who may currently be under nondisclosure obligations as well.

This change to the law is a prime example of the complexities and risks of intellectual property matters. Graham Rogers and his staff have decades of experience and have been qualified as expert witnesses in various state, federal, and tax courts. They have worked in a wide variety of industries including, but not limited to: the pharmaceutical, medical device, high technology, digital services, finances, retail, healthcare services, and the insurance industries. If you are interested in a free intellectual property damages consultation, contact Rogers DVS today, and Graham Rogers will personally respond to your inquiry.

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