The Secret is Out: The Defend Trade Secrets Act is Coming

In what would be the first major piece of intellectual property legislation enacted since the American Invents Act of 2011, it is looking more and more like the Defend Trade Secrets Act of 2016 (“DTSA”) will become law.  The U.S. Senate unanimously passed it on April 4, 2016, which means it is off to the House.  So what does it mean?  Most importantly, rather than having to litigate trade secret misappropriation cases in state court pursuant to state law, usually based upon the Uniform Trade Secrets Act (“UTSA”), there will now be a federal, civil cause of action.  Put simply, if passed, one can file a lawsuit in Federal Court, have federal subpoena power (i.e. across state lines) and the ability for ex-parte seizures of property involved in the misappropriation.

What does it mean for business?  Well, in a time where patent protections may be dwindling, trade secret protection may be improving.  So, businesses should be, internally, specifically identifying information that derives its value from being generally unknown to the public AND implementing reasonable security measures to maintain its secrecy.  In addition, given the so-called “whistleblower” provisions related to employees, employers should make sure their agreements and practices sufficiently address responsibilities and immunities.

Ultimately, trade secrets have traditionally been given less attention than patents, copyrights and trademarks.  That said, they can be the most valuable.  With the enactment of DTSA appearing imminent, businesses should take the opportunity to attend to what can truly be its “secret sauce.”  Trade secret attorneys may soon have another consideration in instances of trade secret misappropriation, and it may be a welcome tool for plaintiff-side trade secret lawyers.


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