This afternoon, as anticipated, President Barack Obama signed the Defend Trade Secrets Act into law, wrapping up a lengthy bipartisan effort to bring trade secrets under federal system law. Some observed that the fact that President Obama chose to sign the bill into law publicly indicates the importance of the new law to the administration.
In any case, as we’ve noted, the DTSA has been called the “most significant expansion” of federal intellectual property law in 70 years (since the Lanham Act was passed in 1946 to provide federal protection to trademarks).
The DTSA attempts to harmonize divergent state laws by creating a single federal framework for trade secrets misappropriation lawsuits. This will lead to a relatively uniform body of case law when bringing trade secret disputes. The Act underscores Congress’s desire to align closely with the Uniform Trade Secrets Act, which has been adopted in some form in every state, except New York and Massachusetts.
Notably, however, the DTSA explicitly provides that it does not preempt state laws already addressing trade secrets protection; instead, the federal and state standards will co-exist like wage-and-hour or antidiscrimination laws.
Trade secrets owners will now be free to pursue claims for misappropriation in federal court and seek remedies such as a seizure order to recover stolen trade secrets.
Although a lesser-known provision, the DTSA’s whistleblower immunity provision may have the most immediate impact for employers. The DTSA provides civil and criminal immunity for employees and contractors who disclose trade secrets under certain circumstances and requires employers to provide notice of this immunity in any confidentiality or trade secret agreement with employees or contractors.
Businesses that fail to include the proper notice in their agreements will not be able to take advantage of the full range of remedies under the DTSA, including exemplary damages (up to twice the amount of actual damages) and attorneys’ fees for willful or malicious violations. To get the maximum benefits of this new law, employers will want to incorporate the immunity notice into their relevant employment agreements and policies as soon as practicable.