New Federal Statute Applies to Theft of Trade Secrets

On May 12, 2016, President Obama signed into law the Defend Trade Secrets Act (DTSA), creating a federal cause of action for trade secret theft and misappropriation.  Previously, companies harmed by stolen trade secrets had to resort to state law remedies.  To succeed on DTSA claims, a plaintiff must first prove that the information in question rises to level of a “trade secret,” something defined broadly to include financial, business, scientific, technical, economic, or engineering information.  Next, a plaintiff must establish that an individual “misappropriated” that “trade secret,” something defined as disclosure or use of a trade secret that was acquired via “improper means.”  According to the statute, “improper means” includes theft, bribery, misrepresentation, or breach of a duty to maintain secrecy. 

DTSA provides for a comprehensive remedial scheme that includes (1) an ex parte request for seizure of property necessary to prevent the dissemination of misappropriated trade secretes (2) injunctions to prevent actual or threatened use, (3) damages for actual losses, and (4) double damages and attorneys’ fees for willful and malicious misappropriation. 

Misappropriation of trade secrets continues to be a significant issue facing companies.  The likelihood that a company will confront this issue has increased dramatically as technology makes it easier to copy and distribute sensitive information.  Given this reality, DTSA is likely to become an important step toward providing companies with an effective way to protect their trade secrets. 

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